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.
© 2014 Liberty Publishing, Inc. All Rights Reserved.