Understanding IPOs – What types of companies go public? – (5)

The JOBS Act offers an issuer new possibilities for structuring its capital raise.
What types of companies go public?
Any company seeking greater access to capital may decide to go public. Companies with revenues and profits or a shorter path to profitability are more likely to have successful IPOs than companies without revenues or that are in a development stage, particularly in difficult economic environments. A company seeking increased visibility and liquidity may also decide to go public. Depending on its size and business, a public company may have from two to twenty analysts covering its stock.
Research and development-based companies, including pharmaceutical and technology companies, with strong valuations but little current revenue may decide to go public to fund long-term, costly R&D. Later-stage R&D companies and companies with near- term milestones may also decide to access the public markets through an IPO.
There are a number of kinds of companies that do not yet have an operating history but may seek to go public in order to pursue their strategic plans, including:
Real estate investment trusts (“REITs”), including mortgage REITs, are formed to take advantage of opportunities to purchase distressed or undervalued mortgage-relatedsecurities and equity REITs that seek to acquire specific kinds of real estate.
Special purpose acquisition vehicles (“SPACs”), a more recent type of blind pool offering, are shell or blank-check companies that have no operations but go public with the intention of merging with or acquiring a company with the

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