Going Public

Going public is the process by which a privately owned company sells shares to the general public for the first time, becoming a publicly traded company listed on a stock exchange. Before this, ownership is held by a small group: founders, employees, and private investors such as venture capitalists. After going public, anyone with a brokerage account can buy or sell a piece of the company on the open market.

The most common route to going public is an initial public offering, or IPO, where the company works with investment banks to price a set number of shares and sell them to investors, first often to large institutions, then to the wider market once trading opens on an exchange. Other, less common routes exist too, such as a direct listing, where existing shares start trading without a new pool of shares being sold first, or a merger with a company that is already public, sometimes called a reverse merger or a SPAC (special purpose acquisition company) deal.

The nuance that trips people up is that "going public" is the broader event or process, while "IPO" is one specific method of achieving it. Every IPO is a way of going public, but not every company that goes public does so through an IPO. Treating the two as always interchangeable will usually be harmless in casual conversation, but it becomes wrong when a company uses a direct listing or a SPAC merger instead.

Another point of confusion is timing. Going public is not a single moment but a process that unfolds over weeks or months: filing paperwork with regulators, marketing the offering to investors, pricing the shares, and finally the first day of public trading, sometimes called the debut or the listing day.