IPO, the initial public offering, is a tender where a private company goes public to offer its shares to the market investors. The public issuance of selling shares proffers a chance for the corporation to raise capital from the open market. An IPO turns the private firm into a public company, converting the private share ownership to the populace. The public offerings hint at the greater capability of growth and expansion.
The market can include any individual or institutional investor. The stock of shares and the offering price conclude the company's new shareholders' equity value.
IPO has two phases - pre-marketing and the public offering itself. The pre-marketing step involves the follow up of the SEC requirements, selection of underwriters, and a public statement.
IPO Merits
- Increased business opportunities
- An easy and fast rise in capital
- Increased value
- Position on the stock market
- Diversified equity base
