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Ipo

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Running head: The IPO process 1
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The Initial Public Offering process

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The IPO process 2
IPO is defined as the procedure in which a privately owned company is converted to a
publicly traded company with the initial transaction of its stock. After an IPO, publicly traded
companies can regress back to being private entity if they so choose to be. An IPO is used as tool
that companies utilize to secure capital through funds or investments for future utilization
(Espinasse 2014).
The main difference between a private and public corporation include; the shares of a
public corporation are accessible for trade on a public exchange, whereas those of a private
corporation or company are not available.
Private corporations are normally controlled by a small number of partners or
shareholders which is always composed of the founder(s) belonging to the corporation and
maybe a small group of investors. Control of the company is seldom a problem because the
shares of a private company are typically owned by few people.
When a private company makes its shares obtainable on a stock exchange thus going
public, it usually sees a rise in the share price, which often results in a huge profit for the
shareholders. However there is always a tradeoff for this profit. While founders of a corporation
can retain greater control as long as they own more than 50 percent of the shares, when there are
many public shareholders, there is always exists more demands on those in charge of the
corporation to make decisions that will not put at risk the stock of the company. Also, there are
generally more strict transparency requirements for public companies. These usually takes the
form of compulsory reporting of yearly reports and financial statements.

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Running head: The IPO process 1 Name Course Professor Date The Initial Public Offering process The IPO process 2 IPO is defined as the procedure in which a privately owned company is converted to a publicly traded company with the initial transaction of its stock. After an IPO, publicly traded companies can regress back to being private entity if they so choose to be. An IPO is used as tool that companies utilize to secure capital through funds or investments for future utilization (Espinasse 2014). The main difference between a private and public corporation include; the shares of a public corporation are accessible for trade on a public exchange, whereas those of a private corporation or company are not available. Private corporations are normally controlled by a small number of partners or shareholders which is always composed of the founder(s) belonging to the corporation and maybe a small group of investors. Control of the company is seldom a problem because the shares of a private company are typically owned by few people. When a private company makes its shares obtainable on a stock exchange thus going public, it usually sees a rise in the share price, which often results in a huge profit for the shareholders. However there is always a tradeoff for this profit. While founders of a corporation can retain greater control as long as they own more than 50 percent of the shares, when there are many public shareholders, there is always exists more demands on those ...
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