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Advantages and customer benefits

Advantages summarized / Short version

An Initial Public Offering (IPO) offers an entrepreneur several strategic, financial, and personal advantages; these include the following:

  1. Access to Capital (Growth Financing)
  • Raising equity without repayment obligations
  • Financing expansion, internationalization, R&D, or acquisitions
  • Strengthening the equity ratio and balance sheet figures → improved creditworthiness

 

  1. Highest Possible, Maximized Company Valuation
  • A listed stock corporation (AG) is valued at a multiple of a non-listed limited liability company (GmbH)
  • Concurrent maximization of the entrepreneur’s wealth

 

  1. Liquidity for the Entrepreneur
  • Opportunity to sell company shares (fully or partially)
  • Wealth diversification: tied-up company assets become tradable
  • Facilitation of succession or exit planning

 

  1. Company Valuation & Value Appreciation
  • Market-based valuation through supply and demand
  • Potential for higher valuation than in private equity or M&A transactions
  • Ability to use shares as “acquisition currency”

 

  1. Increased Awareness and Reputation
  • Higher visibility and credibility with customers, suppliers, and banks
  • Stronger trust from business partners
  • Increased attractiveness as an employer

 

  1. Strategic Flexibility
  • Easier access to future capital (capital increases)
  • Use of stock options for employee retention
  • Independence from individual investors or banks

 

  1. Continuity and Corporate Survival
  • Institutionalized corporate structure
  • Professionalization of governance and management
  • Long-term securing of the company beyond the individual entrepreneur

 

  1. Partial Risk Reduction
  • The entrepreneur can reduce risks without exiting completely
  • Control can—depending on the structure—still be maintained

Advantages / Long version

1. Access to the capital market and growth capital

  • Stock exchange as the most elegant path for raising (growth) capital – access to scalable, interest-free equity; permanently institutionalized / established
  • Consequently, simplified access to professional and partially institutional investors, small-cap funds, structured financing, etc.
  • Increasing independence from primary banks and other traditional financing instruments – diversification of the capital base and financing sources; reduction of debt capital costs
  • Strengthening of the balance sheet structure – higher equity ratio and improved credit rating
  • Optional access to bond markets; issuance of a corporate bond (Mittelstandsanleihe) with the strengthened balance sheet of a listed company
  • Crisis resilience – creation of a financial buffer for economically challenging times within the industry / economy and prevention for so-called “Black Swan events” such as COVID-19 and the Ukraine war, etc.

2. Achieving the highest possible valuation / maximizing company value

  • For GmbHs: Buyers are not financial investors, but rather strategic investors or industry experts with precise knowledge of the respective industry’s weaknesses

Purchase generally in controlling stakes of 50.1%, 75.1%, or 100% – or not at all

    • Valuation of a GmbH based on pre-tax, but usually post-tax annual profit (average of the last 3 balance sheets x factor 4-8 (industry-dependent)). Conclusion: GmbH shares have low fungibility and low valuation.
  • For listed AGs: The stock exchange acts as a “mirror of future expectations”; hopes and trends are often traded; valuation based on P/E (Price-Earnings) ratio of the following year; (Average P/E ratio DAX in Germany: 24.8; as of 12/2025); partly also valuation based on revenue multipliers.
    • Buyers are often “momentum-driven” financial investors without specialized industry knowledge.
  • Current valuation of listed AGs based on 2026 P/E; valuation using P/E (post-tax, pre-tax, sometimes also EBITDA approach) x factor 12-25+ (profitable growth companies); average P/E 2025 Deutsche Börse: General Standard segment: 18-19; Scale segment: 15-20).
  • Valuation for listed growth companies (ICT, Software, High-Tech, Defence/Armament, etc.) with losses: Revenue x factor 2-11 and more (e.g., SaaS AGs factor 4-6.4; FinTech factor 3.7-7.4; Bio/Med-Tech factor 5.1-10; Low Tech 2-3).
  • Valuation for “hype sectors,” special cases, “stock market darlings,” etc.; currently and in the past, P/E ratios up to factor 300! (TESLA P/E in 2025 up to 300) (In 2025: Siemens Energy P/E up to 70; Rheinmetall up to P/E 84; Hensoldt Defense Technology (MDAX) P/E 34; DAX Tech sector P/E currently 36.7; Global P/E of software development currently 96 (so-called trailing P/E ratio)).

Conclusion: Due to the transparency and trust advantages of the capital market, shares of an AG are traded with the highest possible valuation and fungibility—i.e., significantly / many times higher than non-listed private GmbHs/companies.

3. The stock exchange as an ongoing price formation instance

(Valuation Benchmark) and daily trading buy/sell platform – Creation of Liquidity

  • Daily exchange price discovery through the “free play of market forces”; even with medium liquidity, 100+ price fixings / quotes per day
  • Growing liquidity in share trading by building trading volume and speed through continuous IR and PR activities, as well as “Designated Sponsoring” (bank via contract as a liquidity provider)
  • Creation of a cash value; cash and shares functioning as liquid assets; use of own shares (partial cash-out; use of own shares as acquisition currency for M&A / liquidity-preserving purchase of competitors at lower GmbH valuations (own shares + cash component), implementation of buy-and-build strategies, collateralization, release of corporate guarantees, payout of departing partners/shareholders, etc., through the transfer of shares); shares are informally and electronically transferable via Xetra trading;
  • Exit channel for participating VC, PE, investment firms, etc.
  • Elegant solution to potential succession issues through the gradual, value-based “phasing out” of the founder and the deployment of external management (potentially in combination with an MBI – Management Buy-In; the founder and CEO transitions to Chairman of the Supervisory Board; retirement due to age / generational change; slow, step-by-step handover of control)
  • Possibilities for so-called treasury trading (with appropriate articles of association), i.e., trading of the company’s own shares by the AG or by shareholders (subject to insider trading rules); exploitation/anticipation of cycles; implementation of share buyback programs for the AG’s own shares
  • Wealth advantages for the founder / CEO / majority shareholder and entrepreneurial family through – compared to a GmbH – drastically increased liquid assets by booking own shares into a bank custody account = massive wealth increase due to higher valuation of the AG vs. GmbH and reporting as cash assets – possibility of a partial exit through the sale / re-placement of share blocks even in small tranches (block trades) = wealth diversification – de-risking – not putting “all eggs in one basket”; diversifying assets through sales – possibility to release bank guarantees – ability to fulfill wishes regarding a private home, hobbies, etc., for oneself or one’s family; solution or simplification of intergenerational wealth transfer

4. Significant image and publicity gains as a publicly listed company

  • Strengthening the corporate profile in the public eye and visibility among customers and business partners
  • Increased media resonance and public perception through exposure in the capital market specialized public in addition to the previous industry public; in addition to industry-related trade press, nationwide online and print finance and stock market media report due to ongoing IR work
  • Strengthening of visibility and relative competitive position compared to regular GmbHs; compliance with the standards of a listed company increases the likelihood of receiving contracts from public and listed market participants who also operate under EU-harmonized regulation
  • Significant strengthening of attractiveness as an employer; positive, cost-free synergy effects of intrinsic motivation among employees; higher motivation and identification or appreciation as an employee of a listed market participant; improved participation in long-term corporate success; possibility of employee participation via share programs (Employee Stock Option Plan)
  • Improved opportunity to retain key personnel through long-term incentives (receiving share allocations through seniority levels)
  • Building trust and reinforcement through transparent corporate structures and management, adherence to corporate governance, and continuous reporting
  • Family Businesses – preserving values and tradition while simultaneously professionalizing – attracting and retaining external executives more easily – corporate governance as a “stability anchor” and guarantor for the founders’ life’s work
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