The point of an IPO is to A) create liquidity, and B) divest some of the risk to a bigger pool of investors. If you are cash flow positive, and have only long term investors, there’s no real monetary benefit. You’re giving away your dividends to other people.
It’s a question of whether you want to discount your own risk or hold it. IPOing allows you to price your risk and sell some of it off. But if you’re a long term investor there’s a good chance you value your risk higher than the market, which means you’ll lose money in the long term by selling it.
It also depends on your other investment opportunities. If you have other places to invest, then your money has a high time value and you’re paying more “interest”, so-to-speak, on the risk. If you don’t have anywhere better to park your money then the time value is very low and holding that risk is cheap.
There are other factors as well, like government limits on buying other assets, that could make a private investor want to hold.
While those are the "theoretical" reason for IPOs, let's not ignore a primary reason for an IPO, which is to let early investors and employees cash out (though these days many companies, e.g. Slack, are just doing a direct listing instead).
> Slack Technologies Inc. is set to go public on Thursday using a nontraditional process called a direct listing. Only one other big company, Spotify Technology SA, has gone public in this way.
It’s a question of whether you want to discount your own risk or hold it. IPOing allows you to price your risk and sell some of it off. But if you’re a long term investor there’s a good chance you value your risk higher than the market, which means you’ll lose money in the long term by selling it.
It also depends on your other investment opportunities. If you have other places to invest, then your money has a high time value and you’re paying more “interest”, so-to-speak, on the risk. If you don’t have anywhere better to park your money then the time value is very low and holding that risk is cheap.
There are other factors as well, like government limits on buying other assets, that could make a private investor want to hold.