In this episode we will discuss the concept of an Initial Public Offer or IPO.
An IPO is where private corporations or families who own businesses, go public.
What that means is they float their company on a stock exchange, where people can buy and sell (i.e. trade) stocks.
This means members of the public can buy shares in that company.
This also means the original owners are giving away equity in the their company by selling shares, or part stakes in the venture.
The owners of course in return receive money for those shares which may inject financial capital for the business to grow.
The hope is growth and expansion will help drive profits.
As an investor this can be good, if a company expands, grows and profits, it can mean the value of your shares may increase.
An increase in your shares may mean a higher value should you wish to sell your shares to another investor.
The private corporation must transition to being listed as a public corporation.
Investors get the opportunity to look at the company, assess risk and decide whether they believe in a company enough to invest at an early stage.
We explore more of the benefits and risks associated with IPOs in the episode.
This podcast is posted under an Applaudible Self Produced Creator Agreement. Copyright owner is Dev Raga © 2020. All Rights Reserved.
This is general advice only. Seek the advice of a financial adviser.