Most of us know the term IPO but few of us really understand what it means. An IPO is when a private company, for the first time in its history, offers shares of itself to investors and issues stock in exchange, at which time the company transforms into a public company. Thus, the term Initial Public Offering. Off course there are lots more technicalities but the jist is to raise capital.
Most start-ups seek to IPO at some time; however, in order to be ripe for an IPO there are many hurdles that the company must overcome. In essence, the company must substantiate that it is live, well, and profitable. At this time most companies IPO by approaching an investment bank to underwrite the process. An underwriter basically values the shares of the company and creates the medium to offer the shares to the public.
So what does this all mean? To get a better idea, here is an article of a recent IPO that Hilton Hotels initiated.
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