Sign In

An Initial Public Offering (IPO) is when a private company becomes publicly traded by offering its shares to the general public for the first time. This transition allows the company to raise capital from investors, helping it expand its operations, pay off debts, or invest in new projects.

The IPO process begins with the company selecting investment banks to underwrite and manage the offering. These banks evaluate the company's financials, market potential, and risks before setting a price for the shares. The company must also file a prospectus with the regulatory authorities, such as the Securities and Exchange Commission (SEC), detailing financial performance, business strategy, potential risks, and other company characteristics.

Once approved, the shares are listed on a stock exchange, allowing investors to buy and sell them. An IPO can provide significant benefits, such as increased capital, brand visibility, and liquidity for early investors. However, it also comes with challenges, including market volatility, regulatory scrutiny, and the pressure to meet shareholder expectations.

For investors, IPOs present an opportunity to invest early in a promising company, but they also carry risks due to uncertain market conditions and fluctuating stock prices post-listing.

From Chapter 9:

article

Now Playing

9.11 : Intital Public Offering: Concept

Raising Long-term Capital

7 Views

article

9.1 : Concept of Financial Planning

Raising Long-term Capital

14 Views

article

9.2 : Early-Stage Financing in a Business

Raising Long-term Capital

16 Views

article

9.3 : Financing through Venture Capital

Raising Long-term Capital

9 Views

article

9.4 : Choosing a Venture Capitalist

Raising Long-term Capital

10 Views

article

9.5 : Selling Securities to the Public: The Basic Procedure

Raising Long-term Capital

29 Views

article

9.6 : Drafting a Prospectus

Raising Long-term Capital

15 Views

article

9.7 : Advertising the Prospectus

Raising Long-term Capital

5 Views

article

9.8 : Crowdfunding

Raising Long-term Capital

4 Views

article

9.9 : Initial Coin Offerings

Raising Long-term Capital

7 Views

article

9.10 : Alternative Security Offering Methods

Raising Long-term Capital

16 Views

article

9.12 : Initial Public Offering: Importance

Raising Long-term Capital

11 Views

article

9.13 : Secondary Offering: Seasoned Equity Offering

Raising Long-term Capital

19 Views

article

9.14 : Underwriting

Raising Long-term Capital

23 Views

article

9.15 : Functions of Underwriter

Raising Long-term Capital

8 Views

See More

JoVE Logo

Privacy

Terms of Use

Policies

Research

Education

ABOUT JoVE

Copyright © 2025 MyJoVE Corporation. All rights reserved