An Initial Public Offering or IPO is the fundamental pillar in a company’s development. It is a process in which a company starts offering its shares to the public.
The acronym IPO stands for Initial Public Offering and refers to when a privately owned company decides to go public for the first time, listing its shares on a stock exchange and making them available for purchase.
In other words, an IPO is a transition process by which a private company becomes public through the sale of its shares.
An IPO is a huge step for a company that allows it to raise equity capital from public investors and offers the possibility to grow and expand it.
Before going public and being listed on the stock exchange, a company must reach particular listing requirements.
The essential requirements deal with the firm's size (depending on its annual income) and the liquidity of the shares.
The procedure of admission to the Stock Exchange takes place in a period ranging from 4 to 6 months, during which several phases occur: planning, due diligence, drafting of the prospectus, mandatory documentation for listing, listing, the establishment of the consortium of placement, marketing activities, road show, book building, placement, and subsequent negotiation.
Usually, the IPO process consists of two main phases: the first is the pre-marketing phase of the offering, and the second is the IPO itself.