An initial public offering—also known as an IPO—is the process by which a privately-owned/privately-held company begins selling stock to outside investors, and transforms the company from a private company to a public company. Shares of public companies (also called publicly-traded companies) are usually traded on one of two stock exchanges—the New York Stock Exchange or the Nasdaq. A public company can raise money (capital) it needs by issuing and selling shares of its stock on the stock exchange on which it is listed. But public companies must comply with significant reporting and disclosure requirements established by the U.S. Securities and Exchange Commission that private companies do not have to comply with.
