ipo - Updated 05/10/2006 IPO Basics Tutorial

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Updated 05/10/2006 IPO Basics Tutorial http://www.investopedia.com/university/ipo/ Thanks very much for downloading the printable version of this tutorial. As always, we welcome any feedback or suggestions. http://www.investopedia.com/contact.aspx Table of Contents 1) IPO Basics: Introduction 2) IPO Basics: What Is An IPO? 3) IPO Basics: Getting In On An IPO 4) IPO Basics: Don't Just Jump In 5) IPO Basics: Tracking Stocks 6) IPO Basics: Conclusion Introduction The term initial public offering (IPO) slipped into everyday speech during the tech bull market of the late 1990s. Back then, it seemed you couldn't go a day without hearing about a dozen new dotcom millionaires in Silicon Valley who were cashing in on their latest IPO. The phenomenon spawned the term siliconaire , which described the dotcom entrepreneurs in their early 20s and 30s who suddenly found themselves living large on the proceeds from their internet companies' IPOs. So, what is an IPO anyway? How did everybody get so rich so fast? And, most importantly, is it possible for mere mortals like us to get in on an IPO? All these questions and more will be answered in this tutorial. What Is An IPO? Selling Stock An IPO is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity . If the company has never issued equity to the public, it's known as an IPO. (Page 1 of 7) Copyright © 2006, Investopedia.com - All rights reserved.
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Investopedia.com – the resource for investing and personal finance education. Companies fall into two broad categories: private and public . A privately held company has fewer shareholders and its owners don't have to disclose much information about the company. Anybody can go out and incorporate a company: just put in some money, file the right legal documents and follow the reporting rules of your jurisdiction. Most small businesses are privately held. But large companies can be private too. Did you know that IKEA, Domino's Pizza and Hallmark Cards are all privately held? It usually isn't possible to buy shares in a private company. You can approach the owners about investing, but they're not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange . This is why doing an IPO is also referred to as "going public." Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report financial information every quarter. In the United States, public companies report to the Securities and Exchange Commission (SEC). In other countries, public companies are overseen by governing bodies similar to the SEC. From an investor's standpoint, the most exciting thing about a public company is that the stock is traded in the open market, like any other commodity. If you have the cash, you can invest. The CEO could hate your guts, but there's nothing he or
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ipo - Updated 05/10/2006 IPO Basics Tutorial

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