How does one do an IPO?
Claude asks:
Let’s say that I started a corporation last month and want to raise capital. How do I do an IPO?
Let’s say that I started a corporation last month and want to raise capital. How do I do an IPO?
Related questions:
- How do companies profit from selling shares? Juliane asks: I am wondering if-and then how-a corporation continues to make money off its shares sold in the market....
- Reliance Power IPO to list in early Feb Celine asks: Emotions, high energy and a hard sell all intact as Anil Ambani hits the press once again, the...
- Are all IPO underwritten? Alexa asks: I've always thought IPO are fully underwritting (underwritten mean fully insured to raise to whole amount). However, why...
- Raising Capital in Gray Areas Shanon asks: No matter what the market is doing this month or this quarter, there are still strong, pre-public companies...
- China’s biggest bank gets approval for IPO? Santana asks: (China Econominc Net, Jul 19, 2006)China's biggest state-owned commercial bank, ICBC, has received approval for an initial public...
Hire an Invesment Bank
If you are an inventor or a business person with a novel idea but have very little of your own money, you would have to use OPM (Other People’s Money). You likely would find a Venture Capitalist who would fund your operations to get the company off the ground. This might include obtaining patents or building a pilot plant and pulling together a viable business plan for growth. The next step likely would be to obtain a bridge loan (a loan of capital to bridge the gap between Venture Capitalist and your IPO). The Venture Capitalist (usually an expert investor who builds businesses) would likely work with an Investment Banker to manage the IPO (Initial Public Offering). A price for the stock is set depending on the number of shares to be issued, the earnings (or expected future earnings) and the health of the stock market. The Investment Banker allots shares to various Stock Brokers who allow their favored investors to purchase shares say in blocks of 1,000 to 10,000 shares. After the IPO these investors may trade their shares in the “secondary market” through a stock exchange and the general investing public can buy the shares. If it was your company, you and the Venture Capitalist and the Bridge Loan investor and even the Investment Banker would receive shares in the company (not included in the IPO). If the shares of the company go up, your shares could be worth a great deal of money.