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blankseplocked Better to start an IPO or continue making bonds?
 
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ameerkam47
Posted - 2011.08.27 04:58:00 - [1]
 

Title gives the basis. I am looking for more and more isk to continue my trading operation. I have just finished my 4th bond and I was wondering in terms of long term growth and more liquid isk is it better to start an ipo for my corporation and start selling shares, or to just continue creating bonds every couple of months?

Deus Mallius
ANZAC ACADEMY
Posted - 2011.08.27 09:20:00 - [2]
 

Theres more to it than this, but I like to think of it like this:

Do you want to get a loan with fixed repayments

or

Do you want to pay out isk that is in proportion to the size of the stake people have invested, including yourself.

Gatan Hahran
Posted - 2011.08.27 09:24:00 - [3]
 

Bonds. You never know what you wanna do in a month or two and not making a new bond is always better than closing down a corp that has shares out.

Mericdus Gullimann
The Great cornholio's
Paper Tiger Coalition
Posted - 2011.08.27 10:40:00 - [4]
 

Originally by: Gatan Hahran
Bonds. You never know what you wanna do in a month or two and not making a new bond is always better than closing down a corp that has shares out.



totally agree.You could allways ask before the end of the bond wich people want a roll over and who doesn't.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.08.27 10:53:00 - [5]
 

Ameerkam, you need to use the proper tool for the relevant task.

And IPO is a long term niche investment with benefits you don't seem to use and several costs / downsides you would get on your hands. Therefore stick with bonds.

trance atlas
Posted - 2011.08.27 16:09:00 - [6]
 

Originally by: Vaerah Vahrokha
Ameerkam, you need to use the proper tool for the relevant task.

And IPO is a long term niche investment with benefits you don't seem to use and several costs / downsides you would get on your hands. Therefore stick with bonds.


what costs?



Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.08.27 17:48:00 - [7]
 

Originally by: trance atlas
Originally by: Vaerah Vahrokha
Ameerkam, you need to use the proper tool for the relevant task.

And IPO is a long term niche investment with benefits you don't seem to use and several costs / downsides you would get on your hands. Therefore stick with bonds.


what costs?






Upkeep, reporting, continued auditing (performance) when it applies, dealing with shares "boureaucracy" including when shareholders stop playing and so on.

trance atlas
Posted - 2011.08.27 18:42:00 - [8]
 

Originally by: Vaerah Vahrokha
Originally by: trance atlas
Originally by: Vaerah Vahrokha
Ameerkam, you need to use the proper tool for the relevant task.

And IPO is a long term niche investment with benefits you don't seem to use and several costs / downsides you would get on your hands. Therefore stick with bonds.


what costs?






Upkeep, reporting, continued auditing (performance) when it applies, dealing with shares "boureaucracy" including when shareholders stop playing and so on.



Only one of those cost anything and audits are not reserved for only ipos

ameerkam47
Posted - 2011.08.27 19:39:00 - [9]
 

true but looking through the ipos it seems like a lot of work and upkeep. and if you consider time=money then yes it is costly ;)

Gei'neille
Paragon Capital Group
Posted - 2011.08.27 20:11:00 - [10]
 

Originally by: ameerkam47
true but looking through the ipos it seems like a lot of work and upkeep. and if you consider time=money then yes it is costly ;)


You hit the nail on the head. When it comes to an IPO versus a bond there is a constant time commitment that comes with running the IPO. You also have to realize that investors donít just require returns; they require returns that increase in nature. And with any business the larger you grow, the more difficult it is to maintain the higher returns of the past. Innovation becomes difficult. So in offering an IPO the idea that you can offer 5% ad infinitum will make most investors shy from raising their capital levels with you. An IPO also demands greater input from shareholders. A bond Ė it is simply raising debt equity thereby expanding your net basis by which to make a return over the short term, while increasing your long term net asset value. So it all depends on the time, energy, and the challenge that you want to have.

Claire Voyant
Posted - 2011.08.28 03:45:00 - [11]
 

I have to say that VV is making a very good point and the rest of you are completely missing it. With bonds the payments to investors are set in advance and there should never be any question whether the investors are receiving what is due to them. 5% is always 5%. With an IPO, you first have to calculate profits. So do you expense payments made to the manager, or are they part of the profits? How do you value inventories? Once you figure out the profits, who decides how much is returned to investors as dividends and how much is reinvested in the business? How detailed do the financial reports need to be? Do you have ongoing audits of your financial reports and how frequently?

These are questions that should be decided upfront before anyone invests a dime. Then you have to actually do the hard work of preparing those financials while running your business and suffering through those audits. No one in their right mind should do an IPO.

I have a friend who made the mistake of doing an "IPO" on MD. Now, an IPO stands for initial public offering, which simply means the first time a business offers investments to the public. There is nothing in implied in the RL use of the term that says it must be an equity investment and not a bond. But the morons on MD have decided that IPO means equity only and my friend spent many long hours trying to convince what passed for the MD elite of the time that what he really wanted to do was a bond.

So make your life a whole lot simpler and just do a bond. If you don't have a good idea ahead of time what your profits will be, you probably should avoid using public funds for your business because even if you do an IPO investors are still going to want to know what kind of return they should expect. Once you give them a number you will wish you did a bond anyway.


 

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