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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