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Do I understand it correctly, that the DPO did not put any money into the company? If so, it was a pure "Here, we built something valuable. You can have it now
by ArtTimeInvestor 6y ago
Do I understand it correctly, that the DPO did not put any money into the company?
If so, it was a pure "Here, we built something valuable. You can have it now if you pay enough" kind of deal with the investors?
Somehow this type of transaction always makes me feel a bit strange about the value of a company. Not sure if this is a rational thing or not. I think "Why did they bring it to the market at all?". What is the rationale for taking a profitable company that does not need additional funding public?
- MattGaiser 6y ago> that the DPO did not put any money into the company? Yes. No new shares were created. Shares were just sold by existing owners.
- iand 6y ago> What is the rationale for taking a profitable company that does not need additional funding public? Liquidity for investors
- ArtTimeInvestor 6y agoSince the company is profitable, couln't it simply pay out dividends?
- rocqua 6y ago> What is the rationale for taking a profitable company that does not need additional funding public? I think the main reason is to allow insiders who were compensated by stock (options) to cash those out. By creating an actual liquid market, it becomes a lot easier for people who hold the stock to sell it. In general, direct listings allow more people to put money into the company, which should see its stock price rise. Which stock-holders like. Alternatively, it creates a more accurate view of the value of a company, which might make it easier to get loans.
- kgwgk 6y agoWhat is the rationale for selling wholly or partly a profitable company to private investors, Google or anyone else? Money.