An initial public offering (IPO) is the first time a company offers its shares for sale to general investors. The process is called “going public.” The shares are listed subsequently on a national securities exchange, for example, the New York Stock Exchange (NYSE). This method is used by small, medium and large companies to raise funds. The company receives all of the proceeds of the offering. The timing of an IPO is crucial. It depends on a favorable market for a company’s products or services. High-profile IPOs of large, well-known companies that investors later judge to have been over-hyped -- like Facebook -- affect investor judgment about subsequent, smaller company IPOs.
