What is an IPO (Initial Public Offering) and How Do I Buy Into One?
First off, what exactly is an IPO? An IPO is an “Initial Public Offering” in which a company will sell shares to the public in order to raise capital. Let’s say that you have a private company, XYZ. XYZ really wants to expand internationally and would like to have easy access to capital, plus their majority shareholders would like to opportunity to spin off some of their ownership in the company into cold hard cash without selling off the entire company. So XYZ will file for an Initial Public Offering, which is the process in which a private company goes public. Investors buy shares in the company and the company can use that cash to finance its operations. The money that comes from investors does not have to be paid back, however the investors will now have rights as shareholders. In a private company, one person could conceivably own 100% of the company and call all the shots; however, in a publicly traded company, there are shareholders that must be answered to. Also, by being a pub
