Going public ‘not a condition for firm’s success’

COMPANIES that aim to grow big and go public should think twice, advised a Dutch corporate governance professor.

Tilburg University business and financial law professor Erik Vermuelen, in a recent visit to the University of Southern Philippines Foundation (USPF) Lahug campus, said that not all companies that want a major expansion should opt for an initial public offering (IPO).

During an IPO, companies go from private to public and sell shares of stock in their firm. In this set-up, Vermuelen noted that these companies face more regulations as they interact with more investors and follow specific disclosure rules on their finances and transactions.

“It’s not necessary to be listed to be successful,” Vermuelen said when asked about the importance of IPOs for expansion.

Rather, he advised non-listed companies, especially in Cebu where very few companies have gone public, to work on having a balanced board of directors (BOD) who know and understand the market.

“I would advise non-listed companies in this region, if they want to have a company that is sustainable, growing and stay as one of the big players in the region, to look at the board of directors and understand their value. They should look at directors who can actually help them create this window to the market out there,” Vermuelen

said.

He also noted that unlike before when companies who went public usually transferred their headquarters to Metro Manila, there’s no need for that now.

“You should stay where your roots are, where your network is, where you are strongest.

Maybe for some companies, moving to Manila makes sense, but moving to Manila just because that’s where the financial district is doesn’t make any sense and is the wrong thing to do,” he added.

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