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Leap of Faith

Take it from those who've done it--going public will change your business.

This story appears in the October 2004 issue of Entrepreneur. Subscribe »

Companies that go public reach a milestone few other businessesdo, but that's only the beginning of a difficult journey. WhenInternet search engine Google announced its initial public stockoffering was right around the corner, some heralded it as thesecond coming of the tech IPO market. But as has been widelyreported, Google founders Larry Page and Sergey Brin weren'texactly eager to take the public plunge, worried it would transformthe company's business culture and stifle its flexibility.

Legitimate concerns, to be sure. As any public entity canattest, making the leap from privately owned business to publiclyheld company can test an organization on many different levels.While an IPO offers undeniable benefits, including access tocapital, liquidity and personal wealth for the owners, it alsocreates additional responsibilities for the company. To begin with,producing the requisite financial statements is expensive andtime-consuming, especially in recent years with passage of theSarbanes-Oxley Act. The new standards, aimed at placing morestringent controls on corporate accounting practices, areparticularly burdensome for small public companies. What'smore, the pressure for short-term performance results isimmense.

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