What Is IPO

What is IPO

IPO stands for Public Offering.  If a private limited company want to become a publicly traded company, they offer their company shared to the public to purchase and invest. Company shared are shared with the public to invest and share the ownership in the company as per the rules and regulations. By issuing IPO, the company gets listed in the stock exchange.

How does a company offer IPO?

An investment bank is required to be hired if a company want to offer its IPO. This bank will help drafting the agreement as per company financial details and requirement. Company provide all sort of financial information to the investment banker and then this underwriting agreement is made.

Once this agreement is ready, this would be filed for the registration with SEC and if SEC finds this good to go, it would be allotted a date to announce IPO.

 Why does a company offer an IPO?

Money runs the business and every business who are looking for expansion or to achieve their certain business goals, they need money and IPO is the right way to get funds from the market to invest and achieve their business milestones.

 Trading stocks in the open market mean increased liquidity. It opens door to employee stock ownership plans like stock options and other compensation plans, which attracts the talents in the cream layer. 

If a company has launched its IPO, they get lot of attention and lime lite and funds from the market and their brand reputation gets increased as their share highlights in stock exchange. It is a matter of credibility and pride to any company.

 

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