The IPO process itself is sometimes called “going public.” While there are a handful of reasons to go public, a common reason is to raise capital (money) for possible expansion. Offering sales of stock to the public may allow a company to access this rapid influx of investment capital.
To register an IPO, a company files a registration statement with the SEC, including a prospectus, which is the key marketing and legal document that the company uses to market its shares to the public . The company will use the prospectus to solicit investors and includes key information like the terms of the securities offered and the business’s overall financial condition.
Behind the scenes, much work is done to get to the point where the business registers an IPO with the SEC. Registering an IPO is a costly process, and usually requires an entire team of lawyers, accountants, and underwriters. Underwriters generally are responsible for creating the financial terms of an IPO.