Jesus. Are you out of your mind or in 7th grade and don't know any better? Selling equity allows companies to grow exponentially faster than if they used internal financing or debt. Very few companies get large without selling equity, a small handful. Could a mom and pop store develop Windows? Or the I-Phone? Or build 400,000 automobiles a year?
You don't get what markets are for. They are for raising capital/finance for businesses (and for governments and local authorities).
Yeah, like we would be ok with mom & pop type businesses!!!!
How would mom & pop compete with, say Nandos? Nandos is financed by private equity/hedge funds. They plough money in but will want an exit route sometime. It could be trade sale but more likely an IPO on the stock market a la Just Eat, Poundland, Facebook, etc. etc.
John the prime purpose of a stock exchage is to raise capital That is why the secondary is called the aftermarket. All stocks traded in the market must have been IPOd at some tme. Obviously the secondary market is bigger than the primary market as it is revolving. The primary and the secondary market work hand in hand.
"You don't get what markets are for. They are for raising capital/finance for businesses (and for governments and local authorities). "
This statement is just not true as only a small part of the volume on equity markets consists of raising capital. The primary function of equity markets is to allow risk and ownership transference.
The businesses would be much smaller as they couldn't access the public markets for capital.
Also, there would be more companies as people would use their money to start their own companies.
Also, companies would wind up being passed down within families as it would be complicated to sell the companies upon the founder's death.
With smaller companies, there would be fewer barriers to entry and there would be more companies in each sector.
Generally, companies would be smaller and more numerous. CEO pay would be smaller, too since the CEO would have to convince the owners of the company to give them a raise instead of the board of directors.
If they could not sell stock they would depend on loans so banks would determine which companies got money.
Stock sales is how many companies raise money, instead of borrowing. It could seriously impact good ideas and keep them from growing.
The business will not flourish.
Not every company sells stock, and they do just fine. What if there was no stock market, and every business ran like a mom and pop store?
