IPO: Initial Public Offering
The full form of IPO is Initial Public Offering. An initial public offering (IPO) is the first time a company issues shares to the public. This is when a private company decides to go ‘public’. Before the IPO, a company has very few shareholders. This includes the founders, angel investors and venture capitalists. But during an IPO, the company opens its shares for sale to the public. As an investor, you can buy shares directly from the company and become a shareholder.
This guide will break down the steps involved in the process, which can take anywhere from six months to over a year to complete. Below are the steps a company must undertake to go public via an IPO process:
Step 1: Select an investment bank
The first step in the IPO process is for the issuing company to choose an investment bank to advise the company on its IPO and to provide underwriting services.
Step 2: Due diligence and regulatory filings
Underwriting is the process through which an investment bank (the underwriter) acts as a broker between the issuing company and the investing public to help the issuing company sell its initial set of shares.
Step 3: Pricing
After the IPO is approved by the SEC, the effective date is decided. On the day before the effective date, the issuing company and the underwriter decide the offer price (i.e., the price at which the shares will be sold by the issuing company) and the precise number of shares to be sold. Deciding the offer price is important because it is the price at which the issuing company raises capital for itself.
Step 4: Stabilization
After the issue has been brought to the market, the underwriter has to provide analyst recommendations, after-market stabilization, and create a market for the stock issued.
Step 5: Transition to Market Competition
The final stage of the IPO process, the transition to market competition, starts 25 days after the initial public offering, once the “quiet period” mandated by the SEC ends.
Other full forms of IPO
- Intellectual Property Office
- Interdecadal Pacific Oscillation
- Interprocedural Optimization
- Indian Patent Office
- Israel Philharmonic Orchestra
- Intellectual Property Owners
- Interest Paid On
- Integrated Program Office
- Investing Pays Off
- Intercept Point Optimization
- Internet Protocol Over ….
- It’s Probably Overpriced
- Institutional Parole Officer
- Internationale Pruefungs Ordnung
- Immediate Profit Opportunities
- Input, Processing, and Output
- Installation Productivity Option
- Instant Porsche Owner
- Internet Phase One
- Infrastructure Production Operations
- Insane Peoples Outing
- I Peek Out
- Ideological, Political, and Organizational
- Indian Postal Order