Several large, foreign infrastructure projects with predictable revenue streams have raised capital through the issuance of U.S. debt obligations. Companies based in Canada, Israel, and Western Europe account for more than half of the foreign offerings in the U.S. markets. Privatized state-owned entities in Asia, South America, and other regions also have made successful offerings in the United States. When growth can no longer be financed internally, an offering of securities may be the most effective means of accessing the funds needed to acquire other businesses, meet working capital needs, invest in facilities and equipment, or expand research and development efforts. If the business performs well after making an initial U.S. offering, the company should be able to sell additional stock or issue debt securities on favorable terms.
Many experts believe that initial equity offerings command a higher price in the U.S. markets.
In addition, a U.S. offering will establish or expand the global image of a company, which could facilitate efforts to grow the business in the United States and other markets. There are several significant disadvantages that must be weighed against the many advantages of a U.S. offering. A company s operations and financial situation will be subject to greater scrutiny as a result of having U.S. investors. There will be considerable internal and external pressure to maintain the growth rate that the company has established during preceding periods. Investment bankers commissions can be 10 percent or more of the initial offering.