Glossary - Initial Public Offering (IPO)
An Initial Public Offering (IPO) is the process by which a private company becomes publicly traded on a stock exchange, offering shares of its stock to the general public for the first time. This transition allows the company to raise capital from public investors while providing an opportunity for earlier private investors and founders to partially or fully exit their positions.
Also known as
- Going Public
- Stock Market Launch
Use cases examples
- Prospectus: This prospectus is being issued in connection with the Initial Public Offering (IPO) of XYZ Corporation, wherein 10 million shares are being offered to the public at an issue price of $15 per share.
- Press Release: ABC Tech is thrilled to announce its upcoming Initial Public Offering (IPO), which is expected to launch in Q4 2023, signifying a major milestone in our journey as a leading innovator in the tech industry.
Considerations for investors
- Assessing the company’s valuation and growth potential compared to market conditions and industry peers.
- Considering the lock-up period terms and how they might affect stock liquidity and price volatility post-IPO.
Considerations for founders
- Evaluating the company’s readiness for the scrutiny of public markets, including financial performance, corporate governance, and compliance infrastructure.
- Understanding the dilution of ownership and control that occurs as shares are sold to public investors.
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