What is one common reason for a private company to pursue an IPO?

A common reason for a private company to pursue an IPO is to obtain liquidity for private shares. When a company goes public, it allows existing shareholders, including early investors and employees with stock options, to sell their shares on the open market. This process transforms previously illiquid investments into liquid assets, enabling shareholders to realize value from their ownership stakes.

An IPO creates a marketplace for the company's shares, offering an exit strategy for private equity investors and the ability for founders and employees to diversify their holdings. The liquidity gained through going public can also encourage further investment in the company, as new investors can easily buy into the business.

While increasing shareholder wealth, gaining government contracts, and enhancing brand recognition can be potential benefits of going public, they are often indirect outcomes rather than primary motivations. The ability to trade shares freely is a significant driver for many companies deciding to transition from private to public status.