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2. Advantages and disadvantages of IPOs An initial public offering (IPO) refers to the first sale of a company's stock to the public through the stock market. Once a company launches its IPO, it changes from a privately held company to a publicly traded company. Visa, AT&T, Kraft Foods, UPS, CIT Group, Conoco, The Blackstone Group, Travelers, Goldman Sachs, and Agere Systems are among the firms considered to have issued the largest IPOs in U.S. history, each selling for more than $3.5 billion. These companies, along with thousands of other companies whose stock trades in equity markets across the globe, reap the benefits of going public. The following table describes some advantages and disadvantages of going public in the United States. Identify whether each description is an advantage or a disadvantage of going public from the perspective of a company and its owners. Advantage Disadvantage Description Companies can raise capital through equity markets once the company goes public. Once a company goes public, it must disclose operating data and the number of shares that the company's officers and directors own. A publicly traded company has an established market value for the firm. Once a company goes public, its exposure to proxy fights and tender offers increases, and managers have to work harder to maintain control. o

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