Final answer:
In-N-Out Hamburgers could sell its stock on the primary market through an IPO, providing funds to repay early investors and for substantial expansion. Issuing stock also means sharing control with the board of directors and shareholders.
Step-by-step explanation:
If In-N-Out Hamburgers decided to seek equity financing by selling stock, it could sell its stock on the primary market through a process called an initial public offering (IPO). During an IPO, a firm receives money directly from the sale of its stock to public investors which may include individuals, mutual funds, insurance companies, and pension funds. This event provides the funds to repay early investors such as angel investors and venture capital firms. Additionally, the IPO enables a venture capital firm to sell its ownership in the company to the public. Another crucial aspect of an IPO is that it supplies the established business with the financial capital required for significant expansion.
Subsequent to an IPO, a company may decide how to access further financial capital, and options include borrowing from banks, issuing bonds, or selling more stock. While borrowing entails committing to regular interest payments, issuing stock transfers some level of company ownership to the public, subsequently making the firm accountable to a board of directors and its shareholders.