An initial public offering (IPO) is the procedure of releasing fresh shares of stock to the public for the first time in a private firm. A corporation can raise equity funding from the general public through an IPO.
Since there is often a share premium for present private investors, the transition from a private to a public firm can be a crucial period for private investors to realize rewards from their investment completely. Additionally, it enables public investors to take part in the sale.
Many businesses choose to do an IPO in order to allow shareholders to sell their shares to the general public. Startup businesses, expanding businesses, or business owners in need of capital frequently select the IPO option to generate money for future projects.
After a firm has completed its initial public offering, it can still decide to raise more money in the future by doing secondary offers. Being a publicly traded company has advantages of its own, such as making staff stockholders, which would likely increase their motivation to work. Doing an IPO could, in some cases, improve a company’s legitimacy and reputation.
