What is an IPO? A complete plain-English guide

An initial public offering — usually shortened to IPO — is the process through which a private company sells shares to public investors for the first time and lists those shares on a stock exchange. After an IPO, a company is public: its shares trade openly, its financials must be filed quarterly, and its market value is set by the market, minute by minute.

IPOs do two things at once. They raise primary capital — money that goes into the company's bank account to fund growth, pay down debt, or reinforce the balance sheet. And they create a public market in which existing shareholders, including founders, employees, and venture investors, can eventually sell.

Why companies go public

The most common reasons a private company chooses to list:

• Liquidity for early shareholders. Employees and venture investors who hold private stock can finally trade it.
• Access to public capital. Public companies can issue follow-on equity, convertible notes, and registered bonds at scale.
• Currency for acquisitions. A traded stock makes stock-for-stock M&A practical.
• Brand and credibility. Listing on a major exchange remains a meaningful signal to enterprise customers and partners.

The trade-offs are also real: quarterly reporting, public scrutiny, regulatory cost, and the risk of being valued by a market that does not always agree with management.

The five phases of an IPO

1. Selection of advisors. The company hires a lead-left bookrunner and additional underwriters, plus issuer counsel and an auditor.
2. S-1 filing. A registration statement is filed with the SEC. See S-1 explained for what is inside.
3. SEC review and amendment. The SEC issues comments; the company files amendments (S-1/A) until clear.
4. Roadshow and bookbuilding. Management markets the offering; underwriters collect demand. See bookbuilding and the roadshow.
5. Pricing and listing. The deal is priced after market close on day N; trading opens day N+1.

The full timeline is typically six to nine months from kickoff to first trade, though confidentially filed JOBS Act issuers can run shorter cycles.

What about direct listings and SPACs?

Not every public listing is a traditional IPO. A direct listing lists existing shares without raising new capital and without an underwritten offering. A SPAC merger takes a company public by merging with an already-listed shell. Each route has its own pricing mechanic, dilution profile, and lockup structure.

Real recent examples

For concrete walk-throughs of recent IPOs and the advisors who worked on them, see the company pages for Reddit, Klaviyo, and Arm.