An initial public offering, or IPO, is the process by which a private company sells shares to the public for the first time and lists them on an exchange. It raises capital for the company, gives early investors and employees a route to liquidity, and subjects the business to the disclosure rules that come with being public. For investors it is one of the few moments when a company’s detailed financials, risks and ownership are laid out in a single document.
That document is the registration statement, usually Form S-1 in the United States. It describes the business, the use of proceeds, the risks, the financial statements and who owns what, and it is filed with the SEC and available on EDGAR. After filing, the company and its underwriters market the deal to institutional investors on a roadshow, build a book of orders, and then set the price shortly before trading begins. Underwriters are paid a gross spread, and an over-allotment option, often called the greenshoe, helps them stabilise trading in the early days.
Going public is not the end of the story. Lock-up agreements generally restrict insiders from selling for a set period, and the expiry of those restrictions is something investors watch. A public company can later raise more money through follow-on offerings, shelf registrations, rights offerings, convertible notes or warrants, each of which has different consequences for existing shareholders, including dilution.
An IPO is also not the only route to a public listing. A direct listing skips the new-share sale, and a SPAC merger brings a private company public through a different structure with different incentives and costs. Understanding the trade-offs helps explain why companies choose one path over another at different points in the market cycle.
The guides below are grouped from the mechanics of an IPO, through the instruments companies use to raise capital, to corporate actions and a few case studies of specific filings. They are educational and do not recommend any offering.
ECMSource publishes education and research, not personalised investment advice. See the financial information disclaimer.
Start here
How a company goes public, and the alternatives to a traditional IPO.
- How an IPO Actually Works: S-1, Roadshow, Greenshoe, Lock-Up — from filing the S-1 through the roadshow, pricing, greenshoe and lock-up
- IPO vs Direct Listing vs SPAC: How Companies Go Public — how the three routes to a listing differ
- Pre-IPO Shares: How Secondary Markets and Tender Offers Work — how secondary markets and tender offers work before a listing
IPO mechanics
The roles, documents and timelines around a new listing.
- Underwriting Syndicates: Lead Left, Gross Spread, Pot System — lead left, gross spread and how deals are allocated
- IPO Lock-Up Periods Explained: When Insider Selling Hits — when insider selling restrictions end and why it matters
- Accredited Investor Rules: Net Worth, Income, and Tests Explained — who can participate in private offerings and why
Raising capital after the IPO
Follow-on tools and what each means for existing shareholders.
- Shelf Registration Explained: Form S-3, Rule 415, and Takedowns — Form S-3, Rule 415 and takedowns
- Rights Offerings Explained: Subscription Ratios and TERP Math — subscription ratios and the theoretical ex-rights price
- Convertible Bonds Explained: Coupon, Premium, Dilution — coupon, conversion premium and dilution
- Capped Call Transactions Explained: How Companies Offset Dilution — how companies offset dilution from convertibles
- Stock Warrants Explained: Why They Aren’t Just Long-Dated Calls — how warrants differ from options and where they appear in SPACs
- Preferred Stock vs Common Stock: What’s the Difference? — the rights and priorities of each
Private capital and ownership structures
What happens before and around a listing.
- Venture Capital Explained: Stages, Term Sheets, and Down Rounds — stages, term sheets and down rounds
- Private Equity 101: How PE Funds Actually Work — how funds are structured and how they earn returns
- Dual-Class Stock Explained: Class A, B, and C Shares — Class A, B and C shares and voting rights
- ADRs Explained: How to Own TSMC, Alibaba, and Toyota — owning foreign companies through US-listed receipts
Deals and corporate actions
Related transactions that change who owns a company.
- How M&A Actually Gets Done: LOI to Closing Bell — from letter of intent to closing
- Leveraged Buyouts 101: How LBOs Actually Work — how leveraged buyouts are financed
- Spinoffs vs. Split-Offs vs. Carve-Outs: Corporate Divestitures — how companies separate businesses
- How Stock Spinoffs Work: Section 355 Tax-Free Explained — how tax-free separations work
- Poison Pill Explained: How Shareholder Rights Plans Work — how shareholder rights plans work
Case studies from recent filings
Dated examples that show the process in practice; check the filings themselves for current details.
- Oura Files for Nasdaq IPO: $1.2B Revenue, $61M Net Income — an S-1 walkthrough with the financial highlights
- OpenAI Files Confidential S-1; ~$1T IPO Eyed for Q4 — a confidential submission and what it signals
- Anthropic Files Form S-1 for Nasdaq IPO Under Ticker ANT — a recent S-1 and what it discloses
- U.S. IPOs Hit $251B First-Half Record, Pacing for 2021 Beat — a market-wide look at IPO activity
Related tools
- Equity Offering Deal Analyzer — primary versus secondary shares, fees and dilution