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What is an Initial Public Offering (IPO)?

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What is an Initial Public Offering (IPO)? How does an IPO allow an organization to grow financially? When is a merger or an acquisition, rather than an IPO, a more appropriate way to grow?

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This solution provides a description of an Initial Public Offering, or IPO, and compares it to a merger or acquisition with regards to its capital raising abilities. A description is also provided indicating under what circumstances an IPO, acquisition, or merger is preferred. This solution is 250 words.

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An Initial Public Offering, otherwise known as "going public," is a great way to raise large amounts of money to support growth. Essentially founders and equity shareholders of a company will agree to sell a portion of the company to the public by filing with the SEC (Securities Exchange Commission) and listing their stock on one of the stock exchanges. All of the proceeds of an IPO ...

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