In honor of Slack's (WORK) direct listing, which takes place at the New York Stock Exchange Thursday, June 20, here are the differences between a direct listing and an IPO.
There are two different ways for a company to go public.
A company can go through an initial public offering (IPO) or a direct listing.
So, what's the difference and why do companies tend to choose to IPO?
An IPO is the companies first sale of stock issued by a company. The companies who IPO have underwriters--generally banks--that help the company price and aid with regulatory requirements.
However, the underwriters charge a fee when they help a company IPO.
A direct listing, on the other hand, allows a company to go public without an underwriter.
The companies that choose to do a direct listing are generally smaller companies or start-ups.
Watch to learn more about direct listings versus IPO's.
Introducing TheStreet Courses! Financial titans, Jim Cramer and Robert Powell, are bringing their market savvy and investing strategies to you! Learn how to create tax-efficient income, avoid top mistakes, reduce risk and more! With our courses, you will have the tools and knowledge needed to achieve your financial goals. Learn more about TheStreet Courses here.