Channel3000.com
February 19, 2021 9:29 AM
Kate Ashford - Forbes Advisor
Posted:
Updated:
February 22, 2021 9:06 AM
An IPO is an initial public offering. In an IPO, a privately owned company lists its shares on a stock exchange, making them available for purchase by the general public.
Many people think of IPOs as big money-making opportunities—high-profile companies grab headlines with huge share price gains when they go public. But while they’re undeniably trendy, you need to understand that IPOs are very risky investments, delivering inconsistent returns over the longer term.
How Does an IPO Work?
Going public is a challenging, time-consuming process that’s difficult for most companies to navigate alone. A private company planning an IPO needs not only to prepare itself for an exponential increase in public scrutiny, but it also has to file a ton of paperwork and financial disclosures to meet the requirements of the Securities and Exchange Commission (SEC), which oversees public companies.