Initial Public Offering

The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger

companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.

In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

Initial Public Offering (IPO), also referred to simply as a "public offering", is

when a company issues common stock or shares to the public for the first

time. They are often issued by smaller, younger companies seeking capital to

expand, but can also be done by large privately-owned companies looking to

become publicly traded.

In an IPO, the issuer may obtain the assistance of an underwriting firm, which

helps it determine what type of security to issue (common or preferred), best

offering price and time to bring it to market.

IPOs can be a risky investment. For the individual investor, it is tough to

predict what the stock or shares will do on its initial day of trading and in the

near future since there is often little historical data with which to analyze the

company. Also, most IPOs are of companies going through a transitory

growth period, and they are therefore subject to additional uncertainty

regarding their future value.