An initial public offering is the process by which a privately held company becomes a publicly traded company by selling its stock to the general public (IPO). An IPO allows a company to raise funds by selling ownership stakes to a diverse group of investors. It is a method for businesses to obtain public funding in order to support operations or grow.
A company that wants to go public typically hires an investment bank to handle the IPO. The investment bank and the company will work together to determine the appropriate stock price and quantity to be distributed. Following that, the company will file a registration statement with the Securities and Exchange Commission (SEC) detailing its finances and other information.