What is the main obstacle that private corporations face when considering an Initial Public Offering (IPO)?

The main obstacle that private corporations face when considering an Initial Public Offering (IPO) is often related to their size and scale. Many private companies may indeed be too small to attract sufficient interest from institutional and retail investors, which can lead to challenges in achieving a successful IPO. An effective IPO typically requires a company to demonstrate considerable market potential, which is often difficult for smaller entities that lack a robust track record of revenue and profitability.

In addition to size, smaller companies may struggle with visibility and credibility in the public markets, which can make it challenging to create the necessary investor interest that drives a successful offering. Investors generally seek companies that show growth potential and stability, characteristics that may not be fully developed in smaller businesses.

While regulatory complexities, the need for a large investor base, and lack of experienced management can also present challenges, they are not as universally applicable to the majority of private corporations as the issue of being too small. Therefore, the size and scale of the company often emerge as critical factors when contemplating an IPO.