The proceeds of the sale of the Issuer’s stock raise a large equity financing for said Issuer. IPOs are often issued by smaller, younger companies seeking capital to expand, but they can also be done by large privately owned companies looking to become publicly traded.
In an IPO, the issuer has to obtain the assistance of an investment bank, which helps determine what type of security to issue, at what corporate valuation, the best offering price, the amount of shares to be issued and the time to bring it to market. However, this is not easy especially for someone who does not have the expertise and the connections to Wall Street.
Moreover, as securities markets participants establish non written rules that are much more stringent than the legal or regulatory requirements, making a proposal the wrong way may blacklist the issuer forever. That is why a financial and legal guide specialized in financing such as Deschenaux Hornblower & Partners, LLP is an absolute necessity, long before the IPO.