This primer explains how businesses raise money through capital formation (IPO) and the role of listing exchanges in this process.
- An initial public offering (IPO) is when a private company raises capital by offering its common stock (equity) to the public in the primary markets for the first time. Companies may need capital for various business purposes, including newer companies who are looking to grow to the next stage in the business life cycle and those companies who wish to expand organically or via acquisition.
- Capital formation is a critical concept that refers to when companies gather funds to grow, create jobs, and support the economy.
- In this report, we discuss the steps companies take to get listed, the benefits of listing on an exchange, and the rules that keep these markets safe and fair. Understanding how listing exchanges support capital formation helps us see how these markets drive growth and create economic opportunities across the country.