The Initial Public Offering (IPO) 

An IPO is a milestone for a company because it gives access to raising a lot of money. This gives the leverage to grow and expand. The increased listing gives credibility that boost up a company when seeking borrowed funds as well.

An IPO explicitly consists of two parts. 

  • Pre-marketing phase of the offering, 
  • The initial public offering itself

These documents are circulated to the underwriters by private bids when a company is choosing for an IPO and then they  make a public statement to generate interest.

The underwriters then go ahead with the IPO process.

Steps to an IPO

  1. Proposals

Underwriter issues proposals and valuations and strategize on the best suited security to issue, offering price, amount of shares, and estimated time frame for the market offering.

  1. Underwriter

The company selects its underwriters and get into underwrite terms through an underwriting agreement.

  1. Team

IPO teams constitute underwriters, lawyers, certified public accountants (CPAs), and Securities and Exchange Commission (SEC) experts.

  1. Documentation

Information relating the company is essential for IPO documentation. The S-1 Registration Statement is the basic for IPO filing document.

  1. Marketing & Updates

In order to compute demand and present a final offering price, Underwriters and other executives market the share issuance. Companies must mandatory follow to both exchange listing requirements and SEC requirements for public companies.

  1. Board & Processes

Form a board of directors for reporting auditable financial and accounting information every quarter.

  1. Post IPO

There are a few post-IPO provisions that may be instituted like Underwriters may have a stipulated time frame to buy extra shares after the initial public offering (IPO) date. 

Is it good to buy IPO shares?

IPOs are bound to attract a lot of media attention, IPOs are popular among investors because they are likely to produce volatile price movements on the day of the IPO and shortly thereafter. This can once in a while produce large gains, although it can also produce large losses. Ultimately, investors should judge each IPO according to the prospectus as well as their risk appetite.

Author : Supriya S

Author : Supriya S

Supriya is a huge finance enthusiast and loves exploring new fields in finance and learning about money excites her. She loves meeting people and looks forward to learning something unique from them .