Yes, the finance industry is the foremost expert on 3 letter acronyms, and IPO is another example. Standing for Initial Public Offering, it basically means offering shares to the public for the first time, usually with a prospectus that details the investment offer.

IPOs are often described as flotation, going public or listing. Prior to an IPO, enterprises that sell shares to investors are considered to be privately held. The IPO allows investors to liquidate some or all of their interest in the particular entity when it becomes a public company.

Selling Stock
An initial public offering, or IPO, is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public, it’s known as an IPO.

Companies fall into two broad categories: private and public.
A privately held company has fewer shareholders and its owners don’t have to disclose much information about the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents and follow the reporting rules of your jurisdiction. Most small businesses are privately held. But large companies can be private too. Did you know that IKEA, Domino’s Pizza and Hallmark Cards are all privately held?

It usually isn’t possible to buy shares in a private company. You can approach the owners about investing, but they’re not obligated to sell you anything, and probably won’t anyway. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange. This is why doing an IPO is also referred to as “going public.”

This form of investing can be relatively high risk, but at the same time, if you know much about a company looking at an IPO, and you do your due dilligence on the business, it could give you returns far exceeding many other investments in this category. Once again, do your research and never invest in anything you don’t know much about.

That concludes the simple series of investing in shares. There are many websites dedicated to shares and books on investing. Warren buffet has a very down to earth look at investing and it obviously works, considering he is the second richest man in the world by doing this. I hope this series helped you.

PD