Gahlot Institute Of Management & Research

Gahlot Institute Of Management & ResearchPresentation on : initial public offer (ipo)Presented by : Ankita parab & prachi bhoglefymmsInitial Public OfferInitial public offering(IPO) is a type ofpublic offering.The first sale of stock by a private company to the public.IPOs are often issued by smaller, younger companies seeking the capital to expand.Can also be done by large privately owned companies looking to become publicly traded.Initial public offerings are used by companies to raise expansion capital, and to become publicly traded enterprises.The first modern IPO occurred in March 1602 when the Dutch East India Company, offered shares of the company to the public in order to raise capital.Process Of Initial Public OfferWhen a corporation decides to go public, a portion of it will be put up for sale to the public through the sale of stock. An Initial Public Offering (IPO) is the first offering of shares of a privately held corporation to the public. The main reason to have an IPO is to bring money into the business. It is often the main way that a start-up company will be able to make the money it needs to succeed in the market.1.Determine if your company is eligible to go public.IPO, generally the business must be proven to be profitable and have a significant amount of assets. Since there are no set requirements to define eligibility, consider scheduling a meeting with an investment banker or outside consultant to determine whether your company is of the type that the public would want to invest in.

2.Contract with an investment banker.An investment banker will help determine how much money you should raise, at what price the shares should be sold, and what portion of the company should be offered in the IPO.The investment banker serves as an underwriter in that it will agree to purchase all of the shares that the company decides to offer.

3.Draft a prospectus and file it with the Securities Exchange Commission (SEC).The SEC calls this document s-1. its purpose is to disclose the details of the company.In the initial prospectus -- the first document filed -- the terms of the IPO (the number of shares and the price per share) will likely not be finalized, but they are included as an estimate of what the final terms will be.In the final prospectus, filed shortly before the IPO, the amount of shares and share price of the offering are fixed.

4.Present the opportunity to potential shareholders.Before the actual IPO, the banker and the corporations top officials will give presentations to individuals. The investment banker selects the potential investors based on the type of business that wishes to go public. This process results in non-binding commitments, called subscriptions, to purchase shares. It is largely used as a tool to determine whether the public will be interested in investing in the company, as well as to determine the price of the shares.

5.Sell the shares to the investment banker.On the day of the IPO, the investment banker will purchase the shares and simultaneously sell them to investors. The bankers purchase price is the IPO price minus the commission, which usually hovers around 7 percent.The shares can now be publicly traded.