What is an IPO
An IPO means initial public offering. When a company initially offers company’s shares to the public it is called IPO. An initial public offering (IPO) is the initial sale of shares issued by a company to the public. Before issuing IPO, company is considered private Ltd. company, and very few shareholders made up investments (Like family, friends, owner, venture capitalist etc.) in Private Companies. Public is unable to invest in these company’s shares until a company’s share is open for sale to the public. In other hand public companies sale some portion of their stocks to public which is traded on stock exchange. Entire IPO process in India is regulated by SEBI
Advantages of an IPO to the Company
IPO raises money for the company to grow and expand its business. This is the only way for raising large sum for expansions.
Disadvantages of an IPO to the Company
IPO process takes lot of time for setup. They also have to hire investment banks which help them into IPO process. Owners of the company not liable to take many shares for themselves as well.