An initial public offering (IPO) refers to the first time a company offers its common stock for sale to the public on the stock exchange. IPOs are normally done by smaller, and newer companies. However, from time to time, large established private companies wishing to become publicly-traded companies also offer IPOs.

IPOs are usually issued with the assistance of an underwriting firm. The underwriting firm helps with decisions such as whether to offer common or preferred shares, whether shares should be priced at the IPO, and timing with regards to when the IPO should happen.