I’ve heard the term IPO. What exactly is an IPO?
An initial public offering (IPO) is the first sale of a private company’s common shares to public investors. The main purpose of an IPO is to raise capital for the corporation and usually involves the services of an investment banking firm. While IPO’s are effective at raising capital, the vast majority of companies will not meet the asset, income, growth, revenue or capital requirement standards that many investment banking firms have. IPO’s also impose heavy legal compliance and reporting requirements and are a costly undertaking. Many companies never complete the process.
