When a privately-held company decides that they want to become publicly-owned with shares traded on one of the major stocks exchanges like our New York Stock Exchange (NYSE-Euronext – ticker: NYX) or the NASDAQ (ticker: NDAQ), they file for an initial public offering (IPO). The IPO is handled by investment bankers whose firm becomes the IPO underwriter, or lead underwriter in a group or a syndicate of investment banks (underwriters). The investment bankers help value the underlying company to evaluate the suitable IPO issue price, and sell blocks of stock on an IPO “roadshow” collecting fees, and often have some access to a certain number of additional shares of the newly-traded company for themselves or their clients for a period of time after the IPO. There are a number of reasons why a privately-held company would ‘go public’ — including insiders and early investors cashing out some of their holdings, to raise significant cash for business expansion, acquisitions, and more.

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