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Initial public offering or IPO, in financial market terminology, is the initial sale of the common shares of a corporation to the public. It represents a primary market. The sale of stock is regulated by authorities of financial supervision and where relevant by a stock exchange. It is usually a requirement that disclosure of the financial situation and prospects of a company be made to prospective investors.
In the United States, during the dot-com bubble of the late 1990s, many venture capital driven companies were started, and seeking to cash in on the bull market, quickly offered IPOs. Usually, the stock price spiraled upwards as soon as a company went public, as investors sought to get in at the ground-level of the next potential Microsoft.
Initial founders could often become overnight millionaires, and due to generous stock options, employees could make a great deal of money as well. The majority of IPOs could be found on the Nasdaq stock exchange, which is laden with companies related to computer and information technology.
This phenomenon was not limited to the U.S. In Japan, for example, a similar situation occurred. Some companies were operated in a similar way in that their only goal was to have an IPO. Some stock exchanges were set up for those companies, such as Nasdaq Japan .
See also
- AftermarketThe aftermarket (also called secondary market is the financial market for trading of already issued securities. In the secondary market, securities are sold by and transferred from one investor to another. It is therefore important that the secondary mark
- Dot-com
- Financial marketThe financial markets are markets which facilitate the raising of funds or the investment of assets, depending on viewpoint. They also facilitate handling of various risks. The financial markets can be divided into different subtypes: Capital markets cons
- Reverse mergerA reverse merger is a method by which a private company can become a publicly traded company without the expense and time requirements involved in an initial public offering (IPO). The mechanics of a reverse merger are as follows: a publicly traded but do
- Thomson Financial League TablesThomson Financial's standard league tables are rankings of Investment Banks in terms of the dollar volume of deals they work on. New standard league table sessions in compliance with 2004 league table criteria for Debt, Equity, Syndicated Loans, Project F