IPO (Initial public offering)
While growing up and operating on the market, the company needs more finances from outside. Therefore, it decides to go public. One very famous form of getting more funds is the process IPO (Initial Public Offering) – when for the first time, the company makes shares available to the public for purchase.
IPO is when a company issues equity – company holders make ownership of the company available and in exchange for that ownership, the new shareholders pay some amount of money.
Raising money can be done privately and publicly. Raising money privately is helpful because the company does not have to share information with many people and management does not have to worry about confidential information.
With IPO, the company that was running private begins selling its stock to outside investors and gets public. In this way, the company raises capital, and also shareholder structure is getting bigger and more diversified.