Taking a privately held company public is done via an IPO (Initial Public Offering). It wouldn't be an overstatement to say that an IPO is one of the important events in a company's timeline. The company issues a specific number of share certificates at a stated price. Each shareholder then becomes part owner of the company, and each share can be bought or sold on the stock market where the company is listed.

Before this can happen, there are a huge number of compliance issues, and the SEC has very strict regulatory requirements. Once the company manages to get through all the hassle, the benefits can be unthinkable massive. Over-subscribed IPOs in any market in the world tend to catapult the company into the top bracket virtually overnight.

The large amount of cash from an IPO comes in handy for bankrolling current operations and financing future projects. The best part of it is that it removes liquidity bottlenecks and reduces the company's debt. The company enjoys significantly higher name recognition and greater trust from customers and corporate partners.

To begin with, a registration statement is filed with the SEC along with a prospectus for the IPO. This details everything an investor would like to know about the company and its future plans. This is where the underwriters come into the picture.

This process can be significantly eased with the help of the underwriters. It is their job to assist the company with the public offering. They'll help the company move from being a private concern to a public company whose executives need to answer to the Board and every shareholder. But most importantly, they make a judgment about the IPO share price and the number of shares to be issued, and other aspects such as the timing and the market.

There are also changes in the way the company operates post IPO. Disclosures are mandatory, and the company has to file SEC statements and publish quarterly financial results. There's also the AGM where the company has to answer to stockholders and important decisions about the direction of the company and its management are put to a vote. This is one big reason why companies hire new executives after an IPO, since there is a need for management who know how to run a public company.

The success of a public offering largely depends on the growth potential of the company and its sector, and whether or not the business has sound basics and a revenue model. But many IPO's have failed inspite of having all this. It may be because they didn't choose the right market or the right price, or chose the wrong time to go public.

A company could pull off a large IPO in the US, but the same might not be possible in Canada, where the IPOs are usually a little bit smaller and under priced. In Europe, a company has to take into account the situation not only for its own market, but also the conditions in every market in the EU, since the economies and markets of member nations are co-dependent.

Before 2001, when dotcoms were still in vogue, anyone with a website could file for an Initial Public Offering and watch the millions piling up as the markets kept going up. What investors want now is a safe company with lots of assets to its name and long term growth prospects. For any business that can traverse this long road to IPO success, there's a huge reward waiting at the other end.