If you are interested in stocks, then you have most likely heard the term initial public offerings. There is a lot to understand about this form of trading from learning IPO information, understanding IPO data, and working with prime brokerage services for professional services. Here is a quick and easy guide that explains everything you need to know about IPO basics.
What is an IPO?
An IPO is the first sale of stock from a company to the public. Typically, a company can make money by issuing equity to the public, but before they do this they must make their offerings available as an IPO.
There are two categories a company can fall under:
Private companies have very few shareholders, and because of this the owners do not have to disclose to the public information about their finances. Typically, the company’s shares are not available for purchase.
Public companies make all their information public through the stock exchange. Because of this, when a company decides to release their IPO data, this is referred to as going public as no information is withheld. A company who has gone this route can have thousands of shareholders, and have to follow strict federal rules including reporting their earnings every quarter.
How do I go about obtaining an IPO?
Obtaining an IPO can be a long and complicated process. Here is what needs to happen before it is made available to the public.
1. The first thing a business must do is to hire an investment bank to help sell the shares.
2. The company must raise money in order to make IPOs available, so they will undergo an underwriting process. The company and the investment bank will negotiate to come up with a deal.
3. Once the deal is available, the company will release a registration statement.
4. The investment writer will then make the red herring, which is where they attempt to build up hype for the IPO offer.
5. At the end of this process, the customer is able to bid on the deal.
As you can see, the customer is not involved in the IPO process until the very end. Because of this, it is crucial to work with a firm that can help lead you in the decision making process. Good references.