What Is an IPO?
An initial public offering (IPO) is the process by which a privately held company offers its shares to the public for the first time. It is an important milestone in a company’s life cycle, as it marks their transition from private ownership to being publicly traded on a stock exchange. The IPO process involves filing documents with regulatory authorities and issuing new securities that can be bought and sold by investors. Companies typically use IPOs to raise capital for expansion or other investments, while also providing liquidity for existing shareholders who may want to cash out some of their holdings.
The IPO process begins when a company decides they are ready to go public and files registration statements with the Securities Exchange Commission (SEC). This document outlines all relevant information about the business such as financials, management team, products/services offered etc., so potential investors have enough information to make informed decisions about investing in the company’s stock. After this step is completed, underwriters will then market and sell these newly issued stocks through various channels like broker-dealers or online platforms. Once trading commences on an exchange, anyone can buy or sell shares of that particular security at any given time during regular trading hours.