An initial public offering (IPO) date is the date on which a company first starts making shares in itself available to members of the public. It marks an important point in the history of the company as it transitions from private to public ownership. The determination of the date depends on several factors, including legal requirements, market timing, and recommendations from underwriters who sponsor an IPO. Investors who want to know more about a company's IPO date can find it in informational materials about the company and its history.
To prepare for an IPO, a company needs to move through a number of legal steps. These start with filing documentation with regulatory agencies to discuss the planned IPO. These agencies also review promotional documents and other materials, including mandated legal disclosures, to make sure they adhere to the law. Officials can request revisions and changes to these documents if necessary and may also have comments and recommendations.
As the company gains regulatory approval, it also meets with prospective underwriters to find a firm to work with. The underwriters help the company set a price and place the stocks on the market. Usually an investment bank plays the role of underwriter. The company will also go on what is known as a roadshow, where it will promote itself to investors. It selects institutions and other large investors to meet with and drum up interest in the IPO.
Investors and the finance community as a whole usually watch IPOs carefully. They want to know when companies intend to go public so they can take advantage of investment opportunities. A company will usually conceal the IPO date until the last minute, in part because the date can change in response to shifting market conditions and other factors. For anticipated IPOs, the financial community may issue predictions, and some investors even gamble on the IPO date.
Precise laws about the timing of an IPO vary, but usually a company must announce an IPO a set number of days, such as five, before the official date. This gives investors time to prepare. It can issue more advance notice, but this is not necessarily advisable. Once the company issues an IPO date, the process of jockeying among investors begins as they try to get in on the initial offering. Some investors know they will not be able to buy directly from the underwriters, as investment banks usually sell blocks of shares to institutional investors. Instead, they focus on cultivating relationships with likely institutional buyers so they can be first in line when those buyers move to flip their stock on the IPO date.