Page 113 - Initial Public Offering - An Introduction to IPO on Wall Street

Employees who joined a company during its initial years were the ones who accepted lower
pay and incentives in return for equity, and thus they may want to cash out at some stage.
Additionally, it’s easier to retain executives if the organization has publicly traded stock to use
in pay packages.

5.1.4 Market the Company
An IPO is an excellent way to boost reputation and bring in new investors, customers, and
business partners; this is especially true for lesser-known businesses in ‘dull' industries.

Besides the above, legal or practical problems, such as a max shareholder cap in some places
for private firms, often push an organization to go public as well.

5.2 What is the IPO Process?
With the reasons to go public covered, it is time for you to get acquainted with the IPO process
or the process for “going public.”
The IPO process is where existing or new stocks are sold and first introduced to the public by
a formerly unlisted corporation. Before an IPO, a business is deemed to be private—restricted
to approved investors (such as a select group of wealthy individuals, VCs, and angel investors)
or initial funders (like family, friends, or founder), and with limited shareholders.

The issuing business becomes a publicly traded firm on a registered stock exchange after an
IPO. An IPO, therefore, is often widely referred to as "going public."

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