IPO (Initial Public Offering) is a process whereby companies that are privately owned offer shares of their company to the public. It is a way for businesses to raise capital by selling equity in the form of common stock, and it serves as an avenue for investors to purchase ownership stakes in those companies. The IPO process typically involves the hiring of investment banks, who will then help set pricing for the offering and assist with marketing efforts targeted at potential investors.
The IPO can be organized either on a regulated exchange or over-the-counter market (OTC). Regulated exchanges such as NASDAQ or NYSE list stocks according to certain criteria, while OTC markets do not have these restrictions and are therefore more accessible for smaller companies. Companies must decide whether they want to go public through an Initial Public Offering (IPO), Direct Public Offering (DPO), Special Purpose Acquisition Company (SPAC), or Regulation A+ offering depending upon their goals and objectives.
When companies issue securities via an IPO, they become publicly traded corporations with all the financial reporting requirements associated with being listed on a major stock exchange. This includes filing regular reports with regulators like the US Securities Exchange Commission which include quarterly earnings statements, annual audited financials as well as other disclosures related to corporate governance matters such as executive compensation packages and board composition changes among others. In addition, publicly traded corporations also need to comply with insider trading regulations when conducting transactions involving its own securities including monitoring any trades made by corporate insiders.
Ultimately IPOs are about raising money so having clear expectations from investors before launching one is essential in order ensure success throughout the entire process from launch up until after listing day when trading begins on secondary markets like NASDAQ or NYSE
