An initial public offering (IPO) is the term used when a privately-held company offers stock for the first time. IPOs are more common among newer companies, but older privately-held companies may decide to “go public.” A start-up company may use an IPO to raise capital to see it through a critical early development phase. On the other hand, a larger, more mature company may decide to use a stock offering to raise cash (rather than borrow) for expansion or to acquire a new business, particularly if existing debt levels make conventional borrowing difficult.

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