Initial Public Offering
Selling stock to the public
An Initial public offering, or IPO, is the introduction of your company to the public trading market. If you're interested in opening up your company to public investment, an IPO is the process that allows you to get into the game.
An initial public stock offering is an exciting time for any business. As a representation of the growth of your business, and a huge step towards expanding and growing your organization, an IPO puts you and your company out on the market for investment opportunities. Only when you make your company public can you gain the interests of other larger, more experienced companies, perhaps even giving yourself the opportunity to grow and engage in foreign exchange.
Initial Public Offering Process
The initial public offering process involves investment banks providing shares for your company to the general market. While your first public offering can be risky because it can be difficult to predict what the stock market is going to do on any given day, most business owners find the risk worthwhile, since you can garner additional investment capital.
However, don't go into the investment process assuming that it's going to be easy. There are lots of local, national and international rules and regulations regarding stock trading and business investment, so you need to make sure your public offering activities are overseen by a legal professional.
Also, be aware that initial public offerings typically fall victim to the process of under-pricing, whereby the underwriters and investors deliberately price the stock below its worth in order to generate interest. This is a temporary situation used to get the stocks moving in the marketplace and should correct itself quickly after the stock is made public.
Initial Public Offering Costs
Initial public offering costs vary on the type of business you operate, taking into consideration aspects such as the size of the business and the undertaking, the complexity of the stock options, and the history of your company (particularly its finances).
When attempting to determine how much it's going to cost you to put your company onto the public trading market, remember to figure in legal and accounting costs (including the costs of investment bankers), printing and mailing, preparation and consultation, transfer and agreement fees, management, administration and filing fees, and taxes.