I am interested in how the amount of shares is determined initially and how the company determines how many shares they will keep. Also, what is the biggest “Pro” of going public and the biggest “Con”?
In: Economics
IPO means Initial Public Offering. Initial Public Offering (IPO) is the way an organisation goes public, lists itself on the exchanges and sells share to raise capital. In other words, it is a process by which a privately held company becomes a publicly traded company by offering its shares to the public for the first time. A private company, that has a handful of shareholders, shares the ownership by going public by trading its shares. Through the IPO, the company gets its name listed on the stock exchange.
How does a company offer IPO?
A company before it becomes public hires an investment bank to handle the IPO. The investment bank and the company work out the financial details of the IPO in the underwriting agreement. Later, along with the underwriting agreement, they file the registration statement with SEBI.
SEBI scrutinizes the disclosed information and if found right, it allots a date to announce the IPO.
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