Initial public offering

Examples of Initial public offering in the following topics:

• IPOs

  • Initial public offerings are a primary and potentially lucrative means of exit from investment for venture capitalists.
  • An initial public offering (IPO), also known as a stock market launch, is the first time a private company's shares are sold to the general public on a securities exchange.
  • Disadvantages to completing an initial public offering, include:
  • The Initial Public Offering (IPO) Prospectus for Apple Computer Inc. in December 1980.
  • A total of 5 million shares were offered to the public for $22 each.

• Advantages of Public Financing

  • The main advantage in seeking public financing is that it offers a larger pool of funding for the company than private financing alone.
  • A publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating over the counter markets. .
  • After a number of years, if a company has grown significantly and is profitable or has promising prospects, there is often an initial public offering, which converts the privately held company into a publicly traded company.
  • Initial public offerings are used by companies to raise expansion capital, to monetize the investments of early private investors, and to become publicly traded enterprises.
  • When a company lists its securities on a public exchange, the money paid by the investing public for the newly issued shares goes directly to the company (primary offering) as well as to any early private investors who opt to sell all or a portion of their holdings (secondary offering) as part of the larger IPO.

• Types of Stock Market Transactions

  • An initial public offering (IPO), or stock market launch, is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time.
  • Initial public offerings are used by companies to raise expansion capital, monetize the investments of early private investors, and become publicly traded enterprises.
  • When a company lists its securities on a public exchange, the money paid by the investing public for the newly issued shares goes directly to the company (primary offering) as well as to any early private investors who opt to sell all or a portion of their holdings (secondary offering) as part of the larger IPO.
  • Private placement (or non-public offering) is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors.
  • "Private placement" usually refers to the non-public offering of shares in a public company (since, of course, any offering of shares in a private company is and can only be a private offering).

• Corporations

  • Corporations start as private companies that transform into a corporation.They have an Initial Public Offer (IPO), the day the corporation begins selling stock to the public.Usually, the corporation's founder holds large shares in the company's stock and becomes a millionaire or billionaire over night from the market value of his or her stock holdings.

• Shelf Registration

  • Shelf registration is a type of public offering in which the issuer is allowed to offer several types of securities in a single prospectus.
  • Shelf registration or shelf offering is a type of public offering where certain issuers are allowed to offer and sell securities to the public without a separate prospectus for each act of offering.
  • Instead, there is a single prospectus for multiple, undefined future offerings.
  • The prospectus (often as part of a registration statement) may be used to offer securities for up to several years after its publication .
  • Shelf offerings, due to their purposefully time-constrained nature, are examined far less rigorously by those authorities, compared to standard public offerings.

• Seasoned Equity Offering

  • Companies can issue more shares after their initial public offering in what is called a Seasoned Equity Offering.
  • The best known way of selling equity is through an initial public offering (IPO) where a company sells shares on the market for the first time.
  • However, once a company is public, it is still able to raise capital through what is called a seasoned equity offering.
  • For example, a block of shares previously offered to the public that is now held by large investors or institutions are sold.
  • Contrast a seasoned equity offering with an initial public offering and a secondary market offering

• Venture Capital

  • This happens when the business goes public, issues shares to the general public through an Initial Public Offering (IPO), or is acquired by a third party company.
  • Registration right, defined as the special rights to demand registration of their stock on public exchanges, and to participate in an IPO
  • Initially, VC firms establish a fund which pools money raised from individuals, companies and other interested parties.
  • Bridge financing/exit of venture capitalist : Finally, the company is expected to either "go public" or be bought by a third-party company.

• Securities Act of 1933

  • The Act's objectives are to provide investors with material, financial, and other corporate information about issuers of public securities (i.e. stocks and bonds), and to prevent fraud in the offering of such securities.
  • Unless they qualify for an exemption, securities offered or sold to the public in the U.S. must be registered by filing a registration statement with the SEC.
  • Section 4 of the Act limits its application to public offerings (according to SEC guidelines, more than 25 offerees) by issuers and their underwriters (i.e. investment banks).
  • This means that the Act primarily applies to companies offering securities to the public, and not to transactions between investors or to sales of stock to small groups of investors (i.e. private placements. )
  • For public offerings, the main requirement of the Securities Act is registration.

• Purchasing New Shares

  • Current shareholders may have preemptive rights over new shares offered by the company.
  • In practice, the most common form of preemption right is the right of existing shareholders to acquire new shares issued by a company in a rights issue, a usually but not always public offering.
  • In this context, the pre-emptive right is also called "subscription right" or "subscription privilege. " This is the right, but not the obligation, of existing shareholders to buy the new shares before they are offered to the public.
  • The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market.
  • New shares can be traded on exchanges such as the Nasdaq, but will usually be offered to current shareholders before being put on sale to the general public.

• Defining Spread

  • The bid–offer spread for securities is the difference between the prices quoted for an immediate sale (offer) and an immediate purchase (bid).
  • The size of the bid-offer spread in a security is one measure of the liquidity of the market and size of the transaction cost.
  • The bid–offer spread is an accepted measure of liquidity costs in exchange traded securities and commodities.
  • On any standardized exchange, two elements comprise almost all of the transaction cost—brokerage fees and bid-offer spreads.
  • Under competitive conditions, the bid-offer spread measures the cost of making transactions without delay.