The abbreviation IPO stands for Initial Public Offering. We call this process the IPO of a company. A previously privately run company is selling shares to the public via a stock exchange for the first time.

Companies offering shares in this way are often relatively new and small and are attempting to raise new funds and fund future growth by going public. Of course, this is not the case in all cases. Some companies are already huge at the time of their IPO. A good example of this is the IPO of the „Chinese Amazon“ Alibaba, one of the largest in history to date. We shall go into this in more detail in the next chapter.

It is the primary way for companies to raise large amounts of capital to fund business expansion, launch new products, or pay off debts.Provide Liquidity: It allows the founders and early private investors (like venture capitalists or employees) to sell their shares and cash out on their investments.Increase Prestige: Being a public company can improve the company’s brand image and credibility