What Is an Initial Public Offering (IPO)? Why Do Companies Go Public?

Stock chart with the text overlay: "What Is an Initial Public Offering?"

A privately owned company transitions to a publicly traded company through an IPO

What Is an Initial Public Offering (IPO)? 

As a business evolves, a privately held company might decide to transition into a publicly owned entity. This transition can happen to a business at any stage of its life cycle, whether it’s a brand-new startup or a company that has been around for generations. The process it undertakes is known as the initial public offering (IPO), where shares of company stock become available for purchase by the public. That’s why a business that issues an IPO is known as “going public.”

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