Tutorial 11 Flashcards
what’s the difference between private and public companies?
private company’s owned by the company’s founders, management or a group or PRIVATE investors
public company’s a company that sold a portion of itself to the public via IPO
what’s an IPO?
an IPO refers to the process of offering shares of a private company to the public (in primary market)
what is the purpose of an IPO?
allows companies to raise equity capital from public investors
is an IPO considered the last stage of development of a company?
yes
transition from private to public is an important time for private investors to fully realise gains from their investment
who are the main actors in an IPO?
the issuer (the company becoming public)
the underwriter (the investment bank)
the lawyers, the accountants, the analyst, the brokers, the stock exchange & the public investors
SPAC = ?
special purpose acquisition company
what are SPACs?
companies listed on the market for a special purpose
the special purpose is to acquire a private company
do SPACs have a financial history?
no
they don’t because they don’t have balance sheets
they are cash-shell companies
what is the only valuable asset in a SPAC?
the directors or sponsors of the SPAC
who are sponsors of a SPAC?
promoters of the SPAC
usually very well known businessmen
when do companies go public and why?
companies go public when they’re trying to take their operations to the next level
going public = ?
selling shares to investors in the open market
allows companies to raise capital
is SPAC an alternative to IPOs?
yes
why are SPACs becoming increasingly popular?
they’re often quicker than IPOs to execute
why are SPACs formed?
to acquire a company and take them public
what is the difference between primary and secondary markets?
primary market is where securities are created (IPO’s, SPAC’s)
secondary market is where securities are traded (NYSE, NASDAQ)
what’s the difference between listing requirements and market practices?
listing requirements are the market rules agreed by a specific stock exchange
market practices are developed by market operators and aren’t usually included in market rules
sometimes market practices become so important, that exchanges recognise them inside their own rules
the VOC?
a chartered company established by the States General of the Netherlands
first joint stock company in the world
sometimes considered to have been the first multinational corporation
why’s the history of the VOC important?
was the first time when the principle of limited liability shareholders was established
also outlined the agency issue of control in corporations between directors and shareholders
