What is an IPO?

An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public for the first time. This means that the company transitions from being privately owned—typically by founders, early investors, and employees—to becoming publicly traded on a stock exchange. Through an IPO, the company sells a portion of its ownership to outside investors in the form of shares. The primary purpose of an IPO is to raise capital. By selling shares to the public, the company can generate funds to invest in growth opportunities, pay off debt, or improve its operations. Additionally, going public can increase the company's visibility and credibility, making it easier to attract customers, partners, and talented employees. The IPO process involves several steps, including hiring investment banks (underwriters) to help determine the offering price, preparing detailed financial disclosures for regulatory approval, and marketing the shares to potential investors. Once the IPO is complete and the shares begin trading on an exchange, the company must adhere to ongoing reporting and governance requirements to protect shareholders’ interests.