An IPO, or Initial Public Offering, is the process by which a private company offers shares of its stock to the public in a new stock issuance. This allows the company to raise equity capital from public investors and transition from a private to a public company. Companies must meet requirements by exchanges and the Securities and Exchange Commission (SEC) to hold an IPO. The IPO process is often a complex one in which a group of "underwriters" (typically large investment banks) buy all of the shares of the new company and then re-sell them to ordinary investors. Companies hire investment banks to market, gauge demand, set the IPO price and date, and more. An IPO is a big step for a company as it provides the company with access to raising a lot of money, which gives the company a greater ability to grow and expand.

Some of the main motivations for undertaking an IPO include raising capital from the sale of the shares, providing liquidity to early investors in the company, paying off debts, funding growth initiatives, raising the companys public profile, or allowing company insiders to diversify their holdings or create liquidity by selling all or a portion of their private shares as part of the IPO.

Once a company goes public, shares of its stock can be traded between investors on an established stock exchange, like the New York Stock Exchange or the Nasdaq. An investment in an IPO has the potential to deliver attractive returns, but it is important to understand how the process of trading these securities differs from ordinary stock trading, along with the additional risks and rules associated with IPO investments. Trading IPO shares can be riskier than getting exposure to established stocks, due to the unpredictability of the new listing.

In summary, an IPO is a fundraising method used by large companies, in which the company sells its shares to the public for the first time. Following an IPO, the company’s shares are traded on a stock exchange. The main motivations for undertaking an IPO include raising capital, providing liquidity to early investors, paying off debts, funding growth initiatives, raising the companys public profile, or allowing company insiders to diversify their holdings or create liquidity by selling all or a portion of their private shares as part of the IPO.