Initial Public Offering by a Company

2709 Words Feb 1st, 2018 11 Pages
In some cases, this process is described as a transaction with which an investment banking company generates investment capital though making the company to go public. One of the most critical aspects within an initial public offering is significant public interest because investment bankers generate huge fees depending on the amount of capital raised. Consequently, the interest of investment bankers is usually attracted by large or well-recognized companies. Initial public offerings are sometimes characterized with huge gains on the first day but they tend to flop when the financial market is cold.
Overview of Initial Public Offerings: The decision by a company to go public and sell its stock to the public is normally an expensive process, especially for small companies. This decision is guided by a consideration of the advantages and disadvantages involved in going public. A privately held company may decide to sell its stock to the public through an initial public offering due to several reasons. First, such a company may engage in an initial public offering when it seeks to raise extra capital through the sale of ownership to the public ("Initial Public Offerings Investor Guide", par, 2). However, the most common reason is that the capital generated through this process doesn't need to be repaid though debt securities like bonds…
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