Initial Public Offering (IPO)

Description of Initial Public Offering (IPO). Explanation.

Definition Initial Public Offering (IPO). Description.

An Initial Public Offering (IPO) is a corporation's first sale of common shares to public investors. Typically, a company hires an underwriter, am investment bank, to underwrite (handle) the offering and a legal firm to assist in drafting the prospectus. The sale of stock is overseen by financial regulators and where relevant by a stock exchange. It is usually a requirement that disclosure of the financial situation and prospects of a company be made to prospective investors.

IPO's are an Exit Strategy or opportunity for the founders and participating Venture Capitalists to cash in on their investments as their shares are now given a market value.

All following issuances of shares are being called secondary market offerings.

Compare with: Venture Capitalists  |  Chinese Wall  |  Exit Strategy   |  Vulture Capitalist  |  Start-up Company

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End of description Initial Public Offering (IPO). An explanation.