Stock Market: Advantages and Financing for Companies

Advantages and Financing in the Stock Market

As we know, the stock market is a niche market where domestic savings are channeled and external investment in productive activities, making them available to those seeking financing on attractive and competitive terms. In this way, different companies and projects will find significant opportunities in this market to finance their needs, which will also usually be advantageous. Then let's review the reasons behind these possibilities.

Potential Beneficiaries: Issuers

The issuer gives rise to the securities that are traded on the market. Its emissions derive from its lending strategy, which in turn depends on the purpose of use of resources captured.

It can be argued that any person or entity is a potential issuer of securities. However, for purposes of our discussion, securities issues that interest us are those offered to the general public (IPO) and subsequently negotiated plausibly without mishap.

The Instrument: Public Offering of Securities

The Takeover Bid (OPP) is typically defined as an invitation properly disseminated, that one or more natural or legal persons directed to the general public or certain segments thereof, to perform any legal business refers to the placement, acquisition or disposition of securities.

In the above context are the various entities of public and private sector the main potential issuers. Indeed, the Government through its central administration, or through various organizations that comprise it (e.g., Municipalities, state enterprises, etc.) may issue securities in order to finance their activities. Meanwhile in the private sector, companies continually evaluate their financial schemes, using its own internal sources (profits or surpluses generated), or alternatively from outside sources, which may come from banks or securities placement the market.

Benefits of Stock Market Financing

We can state several advantages that the stock market can bring to companies that decide to be financed through it. Clearly, not all are always present simultaneously in all cases, nor in the same degree. The potential benefits to be recognized are:

• Provides financial cost competitiveness.
• Satisfies flexible financing needs in the short, medium, and long term.
• Better management of liquidity cycles.