Initial Public Offering (IPO): Why Do Companies Go Public?
                     Initial Public 
Offering (IPO): Why 
Do Companies Go 
Public?
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Initial Public Offering (IPO): Why Do 
Companies Go Public?
What does IPO stand for? The 
process of selling shares of stock 
to the public by a private 
company is known as an initial 
public offering (IPO). It also 
means that a company's 
ownership is changing from 
private ownership to public 
ownership. The IPO process is 
also commonly referred to as 
"going public." in business 
communication.
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What is an IPO?
In an initial public offering (IPO), 
after a company has decided to 
go public, it hires a lead 
underwriter and assembles a 
syndicate of investment banks 
and broker-dealers (a group 
known as a syndicate) that is 
responsible for distributing 
shares of the IPO to investors.
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What is an IPO?
Stock exchanges are required 
by law to maintain at least two 
trading specialists who always 
participate in offering new 
issues, so as to ensure liquidity. 
The IPO process begins when a 
private company decides to sell 
stock to the public for the first 
time, typically because it wants 
more capital or growth 
opportunities, or for liquidity 
reasons. 
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What is an IPO?
Then what is an 
IPO in the share market? An IPO 
process is sometimes referred 
to as "going public". Investors 
are purchasing shares of 
common stock or preferred 
stock via exchange-listed 
security like regular stocks and 
bonds.
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The History of IPOs
The term initial public 
offering (IPO) has always 
been a buzzword on Wall 
Street and among the top 
investors for decades. The 
first modern IPO was 
conducted by the Dutch 
when they offered shares of 
the Dutch East India 
Company to the general 
public. 
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The History of IPOs
Many companies view IPOs 
as the best way to raise 
funds because they can use 
the money to invest in 
growth. By selling stock on 
an exchange, investors gain 
access to ownership and 
performance data of a 
company. 
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The History of IPOs
The difference between an 
IPO and other investments 
is that stocks purchased 
through an IPO are sold at a 
fixed price (versus auction) 
while they trade freely on 
the open market. Because 
of this, there's potential for 
astronomical gains (and 
losses).
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How does an Initial Public Offering (IPO) Work?
To raise capital and access 
a vast new pool of 
investors, many companies 
decide to take on the 
responsibilities and 
hardships of being a 
publicly traded company. 
This can be accomplished 
through an initial public 
offering (IPO). 
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How does an Initial Public Offering (IPO) Work?
What does IPO mean in 
stocks? An IPO is the first time 
a business sells shares of itself 
to the public. The company 
offers its stock on the stock 
exchange with other 
companies and investors. In 
order to do this, they must 
first go through legal 
processes with the Securities 
and Exchange Commission 
(SEC) as well as numerous 
audits and other regulatory 
requirements. 
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How does an Initial Public Offering (IPO) Work?
People can go online on their 
mobiles, laptop, or 
computers to buy these 
stocks using their Demat 
accounts.
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Why Do Companies Go Public?
The concept of going 
public dates back to the 
early 1800s. At that time, 
most companies were 
private; they were owned 
by a small group of 
investors or by one 
person. 
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Why Do Companies Go Public?
The concept of ownership 
and equity in a company 
was not widely 
understood nor was it 
widely practiced by 
investors. When a 
company goes public, it 
offers its stock to the 
public so the owners have 
more investment capital 
to grow the business. 
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Why Do Companies Go Public?
This allows them to issue 
debt securities listed on a 
major exchange to raise 
further capital. Going 
public allows businesses 
to lower their cost of 
funds, attract better 
talent and increase 
liquidity and 
diversification for 
investors.
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