In stock-market terminology, what is a company’s first sale of shares to the public called?

In stock-market terminology, a company’s first sale of shares to the public is called an initial public offering.

An IPO changes a privately held company into a publicly traded one. Before the offering, the company and its advisers determine the number and type of shares to sell, market the deal to investors, and set an offering price. The shares then begin trading on a public exchange.

An IPO can raise money for expansion, acquisitions, research, or debt repayment. Existing shareholders may also sell shares, although that does not provide new capital to the company. The process usually involves investment banks, legal advisers, regulatory filings, and a prospectus describing the business and its risks.

An IPO differs from a secondary offering, which sells additional shares after a company is already public. It also differs from a direct listing, in which existing shares begin trading without the same traditional underwritten share sale.