An IPO (Initial Public Offering) occurs when a private company decides to sell its shares to the public for the first time. This marks the transition from a private company to a public company.
The company works with a lead underwriter throughout the IPO process. The lead underwriter assists with various aspects of this process, such as helping with the registration of the security, determining the initial offering price, and distributing the shares to each investor once allocated.
The company develops a preliminary prospectus to provide interested investors with important details related to the company and the IPO. The background and corporate structure of the company and how many shares will be offered (and at what initial offering price) are a couple of examples of useful information contained within the preliminary prospectus.
Investors can subscribe to a certain number of shares based on the initial offering price and the settled cash in their account. Once the subscription period ends, the shares are allocated to the investor's account based on their subscription.
Click here to learn how to subscribe to an IPO.
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