What's the Difference Between an IPO and a Direct Listing?

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In honor of Slack's (WORK) - Get Slack Technologies, Inc. Class A Report 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. 

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