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Essay / Analyzing Why Private Companies Go Public - 1348
If a company is in an industry with low entry costs, such as real estate, it is more likely to go public. “We [determined] that companies in industries with low barriers to entry are more likely to go public in order to adopt more aggressive product market strategies that will deter new entrants” (Jong 168) . In these cases, large companies often force newly created companies out of business or buy them out. Companies located in less competitive and emerging markets are also more likely to go public. In this case, everyone is trying to take the company public before everyone knows how to replicate their product or service. This is essentially a first-come, first-served type of IPO. In the past, the fastest growing company often ended up controlling the new economic sector. As this academic review revealed, there are specific types of situations that allow companies to continue to succeed post-IPO.