An initial public offering (IPO) refers to the first time a company sells shares publicly. It is a form of equity financing.
For example, a successful Canadian tech company raises $50 million through an IPO by listing on the Toronto Stock Exchange, selling 5 million new shares at $10 each. The founders' stakes are now publicly traded, and the company uses the proceeds to fund a major expansion.
Why it matters: It provides massive liquidity and access to capital, but subjects the company to relentless public scrutiny and strict regulatory burdens.
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