An initial pubic offering is an IPO. In effect what an IPO does it takes a private company public. It is also a means for an existing company listed on one of the exchanges to spin off or create a new company from its parent company. It all sounds pretty straight forward.
Reasons for going public:
The most obvious reason for a private company to enter the public market is raising immediate liquid assets by way of offering shares in the company. Most private companies would prefer to avoid all of the burden of complying with reporting and other regulations, but sometimes a company needs to expand or generate large sums of money to keep up with competition. The reasons are the advantage of offering a chunk of the company without losing control of the company.
IPOs Past and Present:
Before the acts of a few bad apples like Enron, WorldCom and others IPOs flourished on Wall Street. From the mid 1990s to the early 2000s each day brought a new public offering to the market place. Some weeks two or three new IPOs were introduced to the public market place. There were necessary compliance issues to deal with and prices to set and then the IPO hit the market and the exchanges decided what to do with the new kid on the block. Millions and sometimes more could be generated on the first day of trading.
