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Abstract
The recent initial public offering (IPO) market has been tempting. A record-breaking $34.8 billion was raised in the US in the first 11 months of 1993, compared to $24 billion during all of 1992. This buyer's market opens up opportunities for investors, but it is dangerous for companies due to the intense competition. Before a company considers an IPO, it must set strategy. Areas to beware of include: 1. the ongoing expense of being public, 2. loss of confidentiality, 3. loss of operating flexibility, 4. the myth of shareholder liquidity, 5. detrimental effect on ability to raise additional capital, 6. exposure to uninvited raiders or troublesome shareholders, and 7. time and attention devoured during the IPO process. Alternative methods of raising capital should also be considered. They include private placement of debt or equity and sale to a friendly company.