How does a private company go public? What is the process and requirements? Is there a set amount of profit that a company has to make before going public?
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The private company that wants to go public (i.e. sell some of its shares to the public) hires bankers.
The bankers help the company write its prospectus (like a brochure and listing for selling a home) that includes information on what the company does, how it makes money, how it expects to increase revenue and profit, who current owners are, who runs it, what some risks are, its financial statements etc.
The company and its bankers try to drum up interest by going on a roadshow to large institutional investors (like mutual funds) and talk up the company.
Eventually the company ‘lists’ on a stock exchange and a combination of large buyers (like mutual funds) and small buyers (individuals) buy the shares they were made available for purchase by the company.
There are other steps in between but thats basically it.
There is not set amount of profit a company has to make before going public. (Amazon was unprofitable when it went public and remained that way for a few years after going public) The company does need to have a story for why someone would invest in it and that usually means showing how the company would increase revenues and profitsnand therefore its share price.
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