Raising Capital with Initial Public Offerings (IPO)
Initial public offering (IPO) is a great way for companies to raise money, grow, and expand!How do I calculate the initial public offering?
When considering an Initial Public Offering (IPO), companies should consider the following steps: pre-marketing, selecting underwriters, marketing the offering, and issuing shares. Pre-marketing involves soliciting private bids and making a public statement to generate interest. Selecting underwriters involves researching and evaluating potential underwriters. Marketing the offering involves advertising to generate interest. Issuing the shares will involve calculating the number of shares to issue based on the total capital to be raised, the company's current stock price, and the desired value of the offering. Companies can use tools like Sourcetable to help with the calculations. Doing so will ensure that companies have a successful IPO.
What is an IPO?
An IPO (Initial Public Offering) is the process of offering shares of a private corporation to the public for the first time.
What does the IPO process involve?
The IPO process includes the pre-marketing phase and the public offering itself. It also includes hiring underwriters, preparing documents, filing, marketing, and issuing.
Why do companies go through with IPOs?
IPOs allow companies to raise money by selling shares to the public. This can help companies to grow more, and is an exit strategy for founders and early investors.
Key Points
An Initial Public Offering (IPO) is when a private company sells its shares on a stock exchange
An IPO is a type of equity financing method in which a private company can raise capital by offering shares to the public on a stock exchange. This process is facilitated by an investment bank and includes finding an underwriter to give the first option to institutions, large banks, and financial services firms.
Ordinary investors can purchase shares of a newly IPO-ed company fairly quickly after the offering
Ordinary investors can purchase shares of a newly IPO-ed company fairly quickly after the offering. However, they are required to purchase the IPO shares through institutions, large banks, and financial services firms, which may purchase the shares of an IPO in a mutual fund or an ETF.
