Selling Shares to Raise Capital
How can a company sell its shares
Sell securities by publicly placing them on exchanges. This is the first way to sell shares. An institutional broker can also act as a broker of public placement. Free sale allows the company to receive additional funds for development, as well as to conduct an objective assessment of the value of the company. The latter can be a tool for evaluating the work of employees and is very important for possible takeover or merger deals.
Stock quotes for such a sale are speculative. The initial price is the estimated price, and the subsequent price is already determined by the presence of demand, which depends largely on the reliability and development of the company that owns the shares.
Use private accommodation. In this case, a certain package of shares is sold to a limited number of people, for example, to one or several institutional investors, who always carefully analyze the situation on the market to predict the successful development of the company. The share price in such a transaction is fixed and largely depends on its nominal value and profitability. In such a situation, the contract of sale and purchase is concluded, and the transaction itself is closed.
The reasons for such a transaction may be attracting the necessary investments, merging with another company or joining a more developed and visible organization. OAO can also sell a part of the block of shares to any well-known and respected person, which will secure a reliable reputation for the company and again will lead to an increase in profits.
Another way to sell shares is to sell securities to employees of a joint stock company. This can be done in order to increase the responsibility and motivation of employees, to strengthen the team spirit and smooth out social contradictions.
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