IPO vs. Seasoned Issue: An Overview

An initial public offering (IPO) is when a company offers shares of stock or debt securities to the public for the 🅠first time in an attempt to raise capital. On the other han🔥d, if a company is already listed on stock exchanges and simply decides to release additional stock or debt instruments, it is considered a seasoned issue.

IPO

When a 澳洲幸运5开奖号码历史查询:privately-owned company decides to raise capital by offering shares of stock or debt securities to the public for the first time, it conducts an 澳洲幸运5开奖号码历史查询:initial public offering, at which point it becomes a 澳洲幸运5开奖号码历史查询:publicly traded company.

If and when a company decides to sell shares of its stock to the public to raise money for operations or other uses, it engages the services of one or more 澳洲幸运5开奖号码历史查询:investment banks to act as the underwriters responsible for managing the 澳洲幸运5开奖号码历史查询:underwriting process of the IPO.

The underwriters help the company organize and file information that is required by regulators; they also create a 澳洲幸运5开奖号码历史查询:prospectus disclosing all relevant information about the company (covering investment basics regarding finances and oper🍬ations) and making it available to the public.

Underwriters assess the value of the stock to be issued and, at the same time, determine the initial price the new shares sell for to the public. Once the initial shares are purchased in the IPO, they start to trade among the public in the 澳洲幸运5开奖号码历史查询:secondary market.

Seasoned Issue

When an existing publicly traded company decides to raise additional capital by selling additional shares of its stock or 澳洲幸运5开奖号码历史查询:debt instruments to the public, the share offering is considered a 澳洲幸运5开奖号码历史查询:seasoned issue.

Seasoned issues, also known as 澳洲幸运5开奖号码历史查询:secondary offerings or 澳洲幸运5开奖号码历史查询:subsequent offerings, involve the issuance of additional shares of a publicly traded company to the public. 🥂Given that the company's shares already trade in the secondary market, the underwriters handling the seasoned or secondary offering price the shares at the prevailing stock market price on the day of the offering.

Special Considerations

All companies in the U.S. start as privately-owned entities, generally created by an individual or a group of founders. The owners typically hold all or most of the stock, which is authorized within the company's 澳洲幸运5开奖号码历史查询:articles of incorporation, a legal instrument created when the 澳洲幸运5开奖号码历史查询:corporation is first established.

To fund operations during the early years, the owners typically put up their own money (known as self-funding), seek 澳洲幸运5开奖号码历史查询:venture capital backing, and/or obtain loans or other forms of private financing from ba🐭nks or other financi𓄧al institutions.

However, either due to scale or spending practices, a company may decide to go public with their shares, or offer new ✤ones. This practice can raise more capital, but companies consider the image of an offering almost as much as the capital itself, as the opinion of a company can change drastically due to a mistimed IPO or seasoned issue.