IPO is an acronym in English that stands for “Initial Public Offering”, meaning the moment when a company makes the sale of fragments of its composition to the open stock market, allowing anyone to acquire parts of the company. Tatiana forero Jan 6, 20 | 6 min read what is IPO and how does it work At some point, many entrepreneurs have to face this challenge: choosing a financing option to maintain sustainable growth. In addition to bank loans, the sale of shares privately or crowdfunding, we want you to know an option available to the most valuable companies: we are talking about IPOs. In this article you will learn everything about Public Sales Offers: what they are, what are the conditions that your company must meet to carry out this process and the advantages that trading on the stock market brings to startups and large companies. USA WhatsApp Number List What is and what does it mean to open an IPO? An Initial Public Offering (IPO), from the English Initial Public Offering or Public Offering of Sale (OPV), represents the incorporation of a company to the stock market by issuing its first shares to attract public capital, which comes from different segments of society . An IPO is like a “pilot test” on the demand and the value that a company’s share can have in the stock market, since the amount that is issued is small. However, it is still an excellent form of financing for a company that wants to maintain control of its business.

For startups, IPOs open the door to new shareholders who will leverage their expansion at a low cost of financing. For large companies, IPOs help raise new funds and spread business risk among a large group of shareholders. What is the process for issuing an IPO? In order for IPOs to operate, there are certain processes that are carried out between the different agents of the stock market. These agents are:the stock exchanges, banks and brokerage houses, the market regulatory commission, the participating broadcasters (companies), the investors institutional (Afores, banks, investment funds, insurance companies )Physical persons. If your company has decided to open an IPO, you should contact banks or brokerage houses to place the shares on the market. They will directly handle the purchase and sale of shares, regulated by a commission that is responsible for ensuring the transparency of the process. Once the shares are for sale on the stock exchanges, institutional or personal investors can buy them, as long as you offer them an adequate value and attractive returns. What path should a company follow to open an IPO? Like human beings, companies also have cycles that allow them to enter the market, plan for growth, and reach maturity. Know the stages that companies usually follow until opening an IPO! 1. Introductory stage In the first stage, companies make their first sales with which they manage to validate their business idea, which can be done from an MVP ( Minimum Viable Product ), for example.

As they are just entering a new market, their experience is limited. Therefore, the operational risks of the business are high. 2. Growth stage The second stage allows companies to achieve exponential growth in their sales. With this income, they build a fundamental financial muscle to sustain the next stage. 3. Maturity stage In the third stage, the volume of income has stabilized. Operational risk has been significantly reduced thanks to the experience that managers and collaborators have acquired and, therefore, the company is becoming more attractive to investors. At this point the company has grown considerably. However, it still needs to leverage itself to adapt to new needs such as portfolio diversification or obtaining liquidity to pay debts, for example. This is where entrepreneurs and entrepreneurs should begin to review their financing options. With the size, experience and strength of a mature company, IPOs appear as an excellent alternative. What factors to take into account to finalize an IPO? So what are the conditions that a company must meet to open an IPO? We have listed some characteristics that every company that considers operating on the stock market must have. 1. Strong organizational culture The organizational culture of companies that want to have an IPO must be strong and transparent. This in order to maintain the maximum level of productivity and ensure the expected returns to investors. 2. Customer orientation The ultimate goal of any company is to serve the problem of its ideal customer. This is only achieved with a Marketing philosophy known as customer orientation . It is useless to have infinite financial resources if all the capital is going to remain in bureaucracies or internal processes of a company.

The purpose of the financing should be to provide a better service that leads to an increase in the level of sales. 3. Prospects for growth in offers and services Nobody wants to invest in a business that looks stagnant, don’t you think? Something that gives confidence to many investors is the set of expectations that a company manages to communicate about its growth. Having achievable projects in mind such as office remodeling, hiring new employees, R&D development or the creation of new products will position you as a strong company in the stock market. 4. Brand strength Another aspect that makes your company more attractive to investors is the weight of your brand, expanding with good strategies Branding . A company with a recognized name that is engraved in the minds of consumers will place a higher value on your shares. What advantages does an IPO bring to businesses? Now, you must be wondering if it is worth giving a part of your company to obtain financing. Well, you will see that the advantages of trading stocks are worth it. 1. Capital raising The biggest advantage of IPOs is access to public capital with which you can finance your projects. By selling stocks for good value, you will have liquidity to strengthen your operations. 2. Leverage without financial cost The resources from an IPO do not earn interest or have a settlement term like bank loans, for example.

In addition, shareholders of a company open to the public expect a lower return than in an exclusively private equity company. 3. Increase in the company’s Brand Awareness When opening operations in the stock market, your brand name will inevitably receive more visibility and will have more recognition among other entrepreneurs and potential clients . 4. Diversification of risk and share ownership By issuing shares in an IPO, the operating risk of your business is spread across many shareholders. This protects you and also allows you to remain in control of your business. 5 companies that participate in the stock market when opening an IPOWe have listed 5 companies that opened their IPO’s and, now, are among the most valuable companies in the world. 1. Free Market Since 2017, the largest e-commerce in Latin America became the first Argentine company to be part of the Nasdaq100 ranking that brings together the world’s leading technology companies listed on Wall Street. 2. Uber The IPO Uber was one of the largest in the history of the technology industry. The opening of this unicorn to the stock market meant an expansion in its portfolio of services. In addition to transporting people, Uber now rents electric scooters, does courier services and makes food deliveries. 3. Globant This Argentine multinational software developer has been listed on the New York Stock Exchange since 2015. The company has operations in Latin America, the United States, India, Spain and the United Kingdom.

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