Initial Public Offering
An initial public offering, often called an IPO, marks the transition from a private company to a public one. Through this process, the company offers shares to public investors for the first time.
Before the shares can be sold, the company must file detailed disclosures with the SEC. These filings explain the business, financials, risks, and how the raised capital will be used.
Once the offering is completed, the company’s shares begin trading on a public exchange. From that point forward, the company must meet ongoing SEC reporting requirements.
Why It Matters
An IPO opens access to public capital and liquidity. It also increases transparency and regulatory oversight, which can affect long-term growth and investor trust.
What happens before a company can launch an IPO?
Before an IPO, a company prepares a registration statement, usually on Form S-1. The SEC reviews the filing and may request changes or clarifications. The company also works with underwriters to set pricing and timing. This preparation phase can take several months.
How does an IPO affect company ownership and control?
An IPO introduces new public shareholders, which dilutes existing ownership. Founders and early investors may still retain control through share structure. Voting rights and governance rules become more formal. These changes shape how decisions are made going forward.
What risks do investors face in an IPO?
IPO investors have limited public history to evaluate. Pricing can be volatile in early trading. Disclosed risks may include unproven business models or market uncertainty. Reviewing SEC filings helps investors assess these risks.
Real-World Example
A private software company files an S-1 and completes its initial public offering. After the IPO, its shares begin trading on a major stock exchange.
Initial Public Offering and FinFeedAPI
FinFeedAPI’s SEC API provides access to IPO-related filings, including S-1 registration statements and amendments. This allows users to monitor new public listings and analyze disclosed financial and risk information. Structured access supports timely IPO tracking.