Initial public offerings, or IPOs, involve companies which were previously privately held, making their shares available to be sold to the public for the first time. This company that is making their shares available for public trading will be listed through a securities exchange. The IPO process may involve existing shareholders selling their shares through the IPO to whichever investors wish to buy those shares as they're being sold to the public. However, shareholders that previously held shares in this company when it was a private company and its shares weren't available for public trading can retain the ownership of those shares should they wish to do so. Also, the company could choose to raise new capital through an IPO, and this is often one of the main reasons why a company would choose to go for an IPO so that not only can some of the existing shareholders sell their shares through the IPO should they wish to do so, but that the company can also create brand new shares and sell these through the IPO as well. When a company sells shares for the first time, this raises capital for the issuing company. It is possible for a private company to create new shares to sell them to potential investors. However, doing this through an IPO significantly opens up the pool of potential investors, who may choose to buy those shares. So an IPO may enable a company to raise a significantly greater amount of money than they would've been able to do had they just issued shares as a private company. This creation of new shares and selling them for the first time to the market as a whole is referred to as the primary market. The stages that are involved in the IPO process are comprehensive. Many of these stages happen before the IPO is made public, including valuation and preparing the company from a legal and accounting perspective. For the IPO itself, due diligence involves verifying the claims of management, both from an accounting perspective and a business operations perspective. The next stage involves preparation of a prospectus, which will be used as a marketing document to explain to potential investors why the company has gone through an IPO and what the company intends to do with the proceeds. Many exchanges have detailed requirements of what a prospectus must include and look like.

For your shares to be available to be traded through an exchange, you must make an application to that exchange. Most exchanges have requirements for size and age of company, amongst many other factors before a company can seek a listing. The company along with its bankers and sales team will then prepare a presentation. In fact, they will then take to select institutions, pension funds, fund management companies, insurance companies, sovereign wealth funds, who will be key to the success or otherwise of the IPO. The roadshow and book building process is a wide ranging marketing exercise trying to gauge interest of potential investors. And as a result of that, final pricing and quantity of shares to be sold through the IPO will be finalized.