An IPO occurs when a company first issues its shares to the public. It is one of the most publicized exit strategies but also one of the most complex and costly.
Preparing for an IPO
Good Financial Performance: Revenue growth, profitability, and cash flow have to be consistent to attract public investors.
Corporate Governance: Having in place a strong board of directors, the adoption of best governance practices, and transparency would make the public markets scrutinize them.
Regulatory Compliance: Companies that intend to list would be required to be in compliance with regulations as are set out by organizations such as the Securities and Exchange Commission (SEC) in the United States or similar such entities elsewhere. This would mean doing all the filing of detailed reports and disclosures.