IPO
IPO is the abbreviated form of initial public offering. This is the process by which large private companies or unlisted public companies want to raise their profile and capital by issuing shares to the public for the first time. This is done by listing the shares on a stock exchange of their choice such as the New York Stock Exchange, the London Stock Exchange, or others.
An IPO is a complicated and expensive process that requires professional advice obtained from specialized lawyers and investment bankers. The procedure involves an underwriting process by a syndicate formed by several investment banks. The underwriters will take some of the risk of the listing by agreeing to secure the distribution of the new shares in exchange for a premium. Each stock exchange will have its own set of governing rules which must be thoroughly respected. The advisory lawyers and bankers will have to draw up a rigorous set of documents including a prospectus. All business details and evaluation of the company will be thoroughly scrutinized. It is very important to establish an accurate share price without overcharging or underestimating the value of the new shares.
Best Practice- The Cost of Going Public: Why IPOs Are Typically Underpriced
- Financial Steps in an IPO for a Small or Medium-Size Enterprise
- IPOs in Emerging Markets
- Maximizing Value when Selling a Business
- Price Discovery in IPOs
- Damodaran on Valuation: Security Analysis for Investment and Corporate Finance
- Valuation: Measuring and Managing the Value of Companies
Dictionary
www.qfinance.com