IPO (Initial Public Offering)

An Initial Public Offering (IPO) is the process by which a private company can go public by sale of its stocks to the general public. It could be a new, young company or an older company which decides to be listed on an exchange and hence goes public. Companies go public to raise equity capital and potentially broaden their financial base. An IPO allows a company’s founders and early investors to realize significant gains from their labor and investment, subject to lock-up agreements. Following an IPO, the company will be subject to public reporting requirements and will have increased legal and regulatory requirements and costs.