With over three decades serving in senior executive roles and both public and private board experience, John B. Richards is an advisory partner and principal at the New England Consultancy Group. John B. Richards has broad expertise in initial public offerings (IPO) and private funding and gives his thoughts on the choice between the two. 

As Mr. Richards notes, there is a considerable amount of work involved in launching an IPO or going public to raise funds. To begin with, it must be proven that the business model actually works, and there is the need to convince a discerning investing public, as well as deal with analysts and regulators. Through a public offering, however, control of a company can often be better structured. 

Raising private capital does not require as much effort and there is plenty of private capital available in today’s business environment. Private investors tend to be more knowledgeable and sophisticated and typically tend to want greater control. Hence, a company (particularly management) must ultimately decide whether to deal with the larger amount of work a public offering entails, or choose the ease of private funding with the caveat of less company control.