What happens to an employee when a company goes public? (2024)

When a company goes public, an employee normally has the opportunity to purchase a limited amount of shares at their company's initial offer price. Taking a company public means the company is making its initial public offering (IPO), which indicates the company is now a publicly traded and owned company.

A company goes public when it is looking to raise capital for future operations, expand its business, and stimulate growth. For employees, this can lead to a couple of different outcomes concerning stock options, or sometimes no changes relative to them at all. The most common outcomes for employees are:

• The opportunity to gain restricted stock units (RSUs)

• Stock options

Organizations and businesses go public usually with the hopes of raising capital for growth and expansion. Going public helps a company in terms of building prestige within a specific industry or the financial sector as a whole.

Taking a company public helps to:

• Raise capital for future operations

• Expand business in terms of services, products, and scope

• Lead to acquisitions, where a company can buy out certain competitors