Final answer:
A small company going public through an IPO will most likely benefit from enhanced liquidity and the ability to raise significant funds. Going public opens up access to a broader investor base and creates a market for the company's shares, but also brings increased regulatory scrutiny and a dilution of control.
Step-by-step explanation:
The best advantage a small company would gain from an initial public offering (IPO) is C) Enhanced liquidity and ability to raise funds. When a company goes public, it has the opportunity to sell stocks to a larger pool of investors, which can significantly increase the amount of capital available for business expansion and other ventures. It allows investors to buy and sell shares of the company, providing both the company and the shareholders with increased liquidity. On the contrary, going public involves more scrutiny and regulatory requirements, not less, and it certainly does not involve limited access to capital nor does it increase control over company operations as shareholders come into the picture.
Very small companies typically raise funds from private investors instead of an IPO because at an early stage, they may be seen as too risky, and their stock might not attract significant interest from the public. Moreover, venture capitalists and other private investors often have better information about the company and can provide valuable oversight. With an IPO, a company must be ready to open up its books for public scrutiny and start adhering to the reporting requirements set by regulatory bodies. The decision to go through an IPO is a strategic one that a small company might make when it's ready to scale up and take advantage of a wider capital market.