An Initial Public Offering (IPO) is the process by which a privately-held company raises capital by issuing and selling shares of stock to the public for the first time. The shares of stock are made available for purchase by investors through a securities exchange, such as the NASDAQ or the New York Stock Exchange (NYSE).

The company going public will typically retain the services of an investment bank, which acts as an underwriter for the IPO. The underwriter’s role is to determine the offering price of the shares and to manage the process of selling the shares to the public.

Once the shares are sold, they begin trading on the open market, and investors can buy and sell them just like any other publicly traded stock. The company that goes public receives the proceeds from the sale of the shares, which it can use for business operations or to pay off debt.

Going public through an IPO can be a significant event for a company, providing it with access to large amounts of capital and increasing its visibility among investors. it also can lead to increased credibility, greater liquidity, and liquidity for its shareholders, also it can make it easier to attract and retain talented employees and managers.

However, an IPO also has its downsides, as the company is now subject to greater regulatory and compliance requirements, and it also exposed to greater scrutiny from investors and the public. Additionally, the company will have to share financial information regularly with the public and face pressure to meet earnings expectations.

View Full Answer Page: What is an Initial Public Offering (IPO)?