Initial Public Offering
The term “Initial Public Offering” or “IPO” is referred to as a type of public offering where a company’s stock shares are sold to the general public in exchange for equity shares in the company. By this process, any private company can transform into public company. IPOs are usually the first sale of stock offered company.
These offerings are used by companies to raise expansion capital, monetize the investments, and to become public trade enterprise. In IPO, any company selling its shares is in no way responsible to repay the capital to its public investors. Most of the companies commence an IPO under the assistance of investment banking firms because they have expert underwriters who are responsible for services, including assessment of the value of shares and its prices, and establishing initial sale of share for public market. Public offerings are sold to both institutional investors and retail clients of the underwriters
By going public, companies focus to raise capital and many financial doors opened for the trade. The rates of debt become better because of increased external scrutiny and a public company can always issue more shares if there is a market demand. In the past only private companies enjoy IPOs, but the boom of internet has dramatically changed the concept of public companies. Small firms having no strong financial background or solid public reputation are now able to provide IPOs by going on line.
How Initial Public Offering (IPO) helps companies generate profit?
- It provides enlarge and diversified equity base for the company.
- Enables cheaper access to the capital.
- Increases prestige, exposure and corporate image.
- Attracts highly qualified employees through participation of liquid equity.
- Enhances employees’ interests, productivity and loyalty by allowing employees to benefit from company’s financial success.
- Facilitates merger and acquisitions.
- Providing various financial opportunities (convertible debt, equity, bank loans, etc.)
- Increases market share due to increased public awareness.
- Controls the risk as publicly traded shares are easy to sell in downtime than private companies’ shares.
- Retains authority, because in IPOs company do not share ownership or rights with the public, like venture capital does.
We maintains up-to-date metadata and database of all the companies providing IPO services or planned to provide IPOs in near future.