Expands access to capital. A successful initial public offering (IPO) can immediately bring considerable proceeds to a company, making the public market potentially the single most substantial source of corporate funding. Subsequently, public companies may return to the market for additional capital through secondary equity offerings. Being public, a company is in a position to consider bond or convertible bond issues, and may enjoy a more favorable balance of equity to debt — allowing for greater bank financing and better terms.

Increases employee commitment and recruiting power. By instituting a pink form or Employee Share Option Scheme (ESOS) for employees, public companies can, in effect, make employees owners of the company where they work. It also may offer them an attractive investment on favorable terms. Such plans tend to elicit a stronger employee commitment to productivity and quality, since they link employees’ financial future to the company’s success. At the same time, these plans express the company’s good will through its offer to share ownership. Similarly, stock-option bonus arrangements are attractive compensation to executives, since they link a portion of executive compensation to the company’s future.

Complements product marketing. Articles about a public company in local and regional newspapers and magazines — resulting from the company’s news releases, media relations initiatives, and business journalist inquiries — will inevitably report on the company’s products and services. National newspapers and magazines are much more likely to cover public companies than private companies and focus on products from a positioning and market-share perspective. Television programs focusing on business and finance, also contribute to this exposure with the latest coverage of the markets and profiles of newly public companies. Even the daily stock market tables contribute to the general awareness of public companies. Likewise, a company’s annual report, quarterly reports, and corporate identity brochures publicize the company’s products as much as they define the company, outline strategy, and report on performance.

Expands business relationships. The publicity that a public company generates by meeting its disclosure obligations may bring it to the attention of prospective suppliers and distributors, potential partner companies for joint ventures, or even a research laboratory or inventor with a marketable idea. Such relationships, existing or future, are strengthened by the added confidence that comes from knowing that the company has met stringent SC reporting requirements, plus stock market, financial, and corporate governance listing standards. The assurance that a
company’s financial condition is subject to continued scrutiny by the market may even have a favorable effect on various business negotiations.

Facilitates mergers and acquisitions activity. Because public companies may be able to raise additional cash through a secondary offering, they are generally better positioned to finance cash acquisitions. Alternatively, public companies may also be able to finance acquisitions with their own stock. For acquisitions financed by an exchange of stock, public companies can offer a valuation determined by the market, avoiding the complications of calculating the value of a private company. Finally, in a merger, public companies offer the certainty of public disclosure and broad-based shareholder scrutiny when considering financial conditions and operations.


Provides flexibility in personal financial planning. Stock in a public company is generally more liquid —or easier to buy and sell — than that of a private enterprise. This benefits shareholders by providing a degree of flexibility in personal financial planning. Owning public shares helps to diversify an individual’s portfolio and broadens the eventual disposition of an estate. Shareholders also benefit from the fact that calculating the proceeds from the sale of public shares may be easier, given their public market valuation. Moreover, increased liquidity may enhance investors’ ability to time stock purchases and sales, while observing insider trading restrictions and market trends.



Why the MESDAQ* Market

When companies seek to grow by raising capital through a public offering, selecting the right securities market is critical — equally as important as selecting the right merchant banker, law firm, or accounting firm. This decision should be given much thought, taking into account the company’s responsibilities to its future shareholders and the board of directors’ and management’s potential ability to fulfill them.

That said, however, there is no “rule of thumb” or consensus on selecting the right fit when choosing a marketplace. Factors for consideration might include industry analysis, earnings and revenue growth rates, spread, liquidity, trading volume, public float or other issues as the company defines them.

For technology based companies especially those in the growth stage, it is advantageous for them to consider going public on the MESDAQ market for the following reasons:

Technology Based Companies

Technology companies are not mere users of technology but developers of technology with the technical capabilities to research and develop new technology, processes or equipment. This includes a broad spectrum of companies that commit substantially to research and development, companies with intellectual property, companies that own new technology, companies that build brands, companies with niche markets, companies with substantial exports in non-traditional areas, companies with substantial foreign earnings, companies that contribute significantly to national development in technology.

There are 12 technologies currently identified as the priority areas of MESDAQ

High-Growth Companies

High growth companies can either be in technology or non-technology areas. High growth companies are companies that have an outstanding business model, a unique product, a diversified market and client base for the product, perhaps in an industry that has high barriers of entry - in short a company that has a high degree of potential to grow and expand
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*Malaysian Exchange of Securities Dealing & Automated Quotation (MESDAQ) was established on March 18, 2002 through the merger of Kuala Lumpur Stock Exchange (KLSE) and MESDAQ.



In a recent IPO initiative exercise conducted, we manage to provide the following results to our client:

Tangible