When a privately held business collects money from the public and in turn gives them shares in their company. The shares are then traded for the first time in the stock market. The process is called Initial Public Offering.

Why companies go public?

Companies go public to raise money. It gives them financial capital, that they can use to clear off debts, improve the infrastructure, invest in research and development of new products, and introduce new products and so on. Apart from that, the increased financial scrutiny during the process of going public will get them better debt rates when they are issuing it.

And if the company’s stocks are in demand, there is always scope for mergers and acquisitions. The terms of negotiations can be in stocks. The demand also attracts the company’s top talents as the company can offer stock options as reimbursement. The company gets credibility and visibility after it gets listed on the stock exchange