New ways of equity financing via the stock exchange

In times when debt capital is becoming scarcer, companies - especially small and medium-sized enterprises - are relying on equity capital to a new extent. The main reason is changes in lending due to Basel II and the financial crisis. Against the backdrop of high refinancing requirements and more restrictive lending practices, SMEs are putting their financing mix on a broader footing in order to reduce dependency on individual financing instruments and better balance possible renewed bottlenecks on the credit market.

Thus, a structural change in corporate financing has been taking place for some time. In other words, the need for equity and near-equity financing instruments is increasing, especially among medium-sized companies.

Initial public offering as an equity financing instrument

Just like profit retention, founder financing and private equity, the IPO is an instrument for independently financing investments in corporate growth and internationalization - through direct access to the capital market. In addition to financing growth and internationalization, there are many other reasons for going public, such as financing acquisitions, the possibility of employee participation, improving the company's image and name recognition, access to other capital market instruments, the regulation of corporate succession or the possibility of asset diversification.

Entry Standard as customized capital market access for small and medium-sized enterprises

Traditionally, the strongest counter-argument is the high transparency requirements of the capital market, as these are associated with costs. They result in particular from the information requirements that are linked to a stock exchange listing for reasons of investor protection. However, through graduated transparency requirements, trading segments also create the opportunity for SMEs to gradually tap the capital market as a source of financing via the stock exchange.