Glossary
Initial Public Offering (IPO)
The first sale of a company's shares to the public, after which those shares trade on a stock exchange.
An initial public offering, or IPO, is the process by which a private company sells new shares to public investors for the first time and lists those shares on a stock exchange. The transaction has two simultaneous purposes: it raises primary capital for the company and creates a public market in which existing shareholders can eventually sell.
In a typical US IPO, the issuer files a registration statement (Form S-1) with the SEC, conducts an investor roadshow, builds a book of demand, prices the offering, and lists the next morning. The lead-left bookrunner manages the process and allocates shares; other syndicate members provide additional distribution.
Not every public listing is an IPO in the strict sense. A direct listing lists existing shares without raising primary capital. A SPAC merger takes a company public through a merger with an already-listed shell. Each path has different mechanics for pricing, dilution, and lockup.