I know what IPO is, do you?

By Loo Jia Huey

IPO, otherwise known as Initial Public Offering or ‘going public’, is the process of offering company shares to the public.

Through the IPO process, privately-owned companies are transformed into public companies.

Depending on how well your company is doing, the share price may increase or decrease.

One of the main reasons companies do IPOs is to let early investors in the company cash out their investments. Other reasons may be to help the company earn more publicity.

By doing this, even though it can be a great way to earn money, there are also some risks to think about before doing an IPO.

For example, IPO may not be very practical, since IPOs are not as easy to buy as it seems. After all, most people do not have a brokerage account, which takes some time and money to create one.

Another disadvantage is that IPOs are expensive, and there are costs for maintaining your company’s publicity.

So, how does an IPO work? Firstly, there are proposals to decide the price and amount of the company’s IPO.

The company then chooses its underwriter, and does documentation about the information related to the company.

And the post-IPO stage involves the business strategies for IPO.

Potential investors must realise that IPO investment is a very big decision, as there are many pros and cons to be considered.

Jia Huey is eleven.