Going Public

What is IPO?

Public Offering; It is the activity of a company that announces that it puts its shares on sale, opening the way for all investors to become shareholders. Public offering is the sale of companies and their assets by dividing them into small shares.

Companies may apply to the public offering method for different reasons. Successful companies with high growth rates, in order to expand their activities and fund their investments; Companies with a deficit of financial resources, on the other hand, are offered to the public in order to make investments or pay their debts without resorting to bank loans or borrowing. On the other hand, investors also have the opportunity to invest in the values ​​of companies traded on the stock exchange by buying stocks. Public offering is a method that produces positive results, especially in the long run.

Public offering; It is divided into two as primary and secondary public offerings. Public offering of previously non-public companies, primary public offering; It was a secondary public offering, which was previously offered to the public, but the second time this transaction was made due to the low public offering rate in the first.

What Are The Conditions For Public Offering?

There are a number of conditions that must be met in order for the public offering to be carried out.

  • Contacting brokerage firms

Companies that intend to offer to the public must first contact intermediary institutions and sign a brokerage agreement. The institution in question must be an authorized intermediary institution for public offering. With the signing of the contract, the public offering transaction is realized.

  • Contacting the Capital Markets Board (CMB)

Companies wishing to open their capital to the public have to sign a contract with the Capital Markets Board. Thus, they are subject to the control and decisions of the CMB. After the company is brought into compliance with the CMB legislation, they can be offered to the public. With the realization of these transactions; brokerage firm makes an application to the Capital Markets Board and Borsa Istanbul to initiate the public offering of the company in question.

  • Examination of company data by Borsa İstanbul and CMB experts

The company’s headquarters, general activities, market value, etc. their characteristics are examined by Borsa Istanbul and CMB officials and these institutions are informed. Once the suitability of these data is accepted, the public offering of the company has actually begun.

What Gains to Public Offering Companies?

There are many advantages of public offering to companies.

  • Provides financing

By ensuring the financing needs of companies, it makes it possible to convert this resource into new investments or to avoid borrowing.

  • Strengthens the financial structure

The public offering, which creates positive effects on the company’s debt / capital ratio, strengthens the capital structure of the company and offers ease in obtaining debt.

  • Provides liquidity

Thanks to the shaping of stock prices according to supply and demand, the transparent determination of the company value makes it possible to know the values of active companies.

  • Increases prestige

The company, which is offered to the public, gains a high visibility and its awareness increases.

  • Increases credibility

The publicly listed company creates an atmosphere of trust for customers and suppliers financially.

  • Provides an increase in value

Since public companies are more transparent and well-known than non-public companies, this reflects positively on the values of this company.

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