IPO: What is it and why is it needed?

Business

Before embarking on an IPO, a company will need to conduct a thorough analysis of its operations, including its management structure, financial health and growth prospects. In addition, the company will have to meet the strict requirements of the exchange on which it plans to launch the IPO.

IPO: What is it and why is it needed?
IPO (Initial Public Offering) is when a company goes public for the first time and sells a portion of its shares to an unlimited number of people.

Preparing for an IPO can take months or even years. Once a company goes public, it must report regularly on its activities and undergo audits to demonstrate transparency to investors.

Why do companies go public with an IPO?

- Raise funds: IPO enables companies to obtain additional funding for business development, acquisition of new assets, or debt repayment.
- Increase value: Going public can enhance the company's worth and make it more appealing to investors.
-Become recognisable: IPO increases brand awareness and makes the company more transparent.

How does an IPO work?

1. Preparation:

- Analysis: the company assesses its financial stability, profitability, and market capitalisation.
Choice of exchange: each exchange has its own requirements for companies.
- Underwriter: the company selects an investment bank to assist with its IPO.

2. Coordination:
- Prospectus: a document containing information about the company and its shares.
- Share price: the underwriter, together with the company, determines the price at which the shares will be sold.

3. Advertising:
- Roadshow: the company conducts presentations for potential investors.

4. Placement
- Demand determination: the underwriter collects applications from investors.
- Listing: the company's shares appear on the stock exchange and become available for purchase.

Example:

- Media company Reddit went to IPO.
- Share price: $31-$34.
- Number of shares: 22 million.
- Objective: to raise up to $748 million.

IPO is an important step for the company's development.

Stay tuned for updates: Telegram may conduct an IPO in the USA if it becomes profitable.

Note:
IPO is not suitable for all companies.
Thorough preparation is required before IPO.
IPO can be a risky undertaking.

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