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IPOs

What is an IPO?

Initial
Public
Offering

When shares of a company are first sold to the public AKA “Going Public”.

Why Go Public?

  • Raise cash
  • Attract awareness and interest
  • Gain credibility
  • Increase liquidity (easier to sell or convert ownership to cash)
  • Attract top talent

IPOs are highly anticipated for both investors, who see growth and want to invest and for the company’s owners, who will get a payout for giving up a piece of the business.

Public Company

  • Shares sold on exchange to outside investors
  • Stock traded on an exchange
  • Company financials are public
  • Must file with The SEC (The Securities & Exchange Commission) and comply with regulations

Private Company

  • Majority owned by founders, family, or key employees
  • Stock not for sale to general public
  • Company financial information private
  • More flexibility and maneuverability with less regulations

How to get ready for an IPO

  • Hire a brokerage firm
  • Meet with investment banks
  • Secure top-notch talent from company and board
  • Meet with public investors to produce business to research analysts
  • Make sure financial projections are reasonable

Fun Facts

  • The largest IPO on record was Alibaba, which was valued at $25 Billion in 2014
  • Facebook’s initial IPO price was at $38 per share, but the stock fell as soon as it opened and now it’s worth over $100!

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