when a company reaches a stage in its growth process where it believes it is mature enough for the rigors of sec regulations along with the benefits and responsibilities to public shareholders it will begin to advertise its interest in going public 
typically this stage of growth will occur when a company has reached a private valuation of approximately 1 billion also known as unicorn status however private companies at various valuations with strong fundamentals and proven profitability potential can also qualify for an ipo depending on the market competition and their ability to meet listing requirements ipo shares of a company are priced through underwriting due diligence when a company goes public the previously owned private share ownership converts to public ownership and the existing private shareholders shares become worth the public trading price share underwriting can also include special provisions for private to public share ownership generally the transition from private to public is a key time for private investors to cash in and earn the returns they were expecting private shareholders may hold onto their shares in the public market or sell a portion or all of them for gains meanwhile the public market opens up a huge opportunity for millions of investors to buy shares in the company and contribute capital to a company s shareholders equity the public consists of any individual or institutional investor who is interested in investing in the company overall the number of shares the company sells and the price for which shares sell are the generating factors for the company s new shareholders equity value shareholders equity still represents shares owned by investors when it is both private and public but with an ipo the shareholders equity increases significantly with cash from the primary issuance history of iposthe term initial public offering ipo has been a buzzword on wall street and among investors for decades the dutch are credited with conducting the first modern ipo by offering shares of the dutch east india company to the general public since then ipos have been used as a way for companies to raise capital from public investors through the issuance of public share ownership through the years ipos have been known for uptrends and downtrends in issuance individual sectors also experience uptrends and downtrends in issuance due to innovation and various other economic factors tech ipos multiplied at the height of the dotcom boom as startups without revenues rushed to list themselves on the stock market the 2008 financial crisis resulted in a year with the least number of ipos after the recession following the 2008 financial crisis ipos ground to a halt and for some years after new listings were rare more recently much of the ipo buzz has moved to a focus on so called unicorns startup companies that have reached private valuations of more than 1 billion investors and the media heavily speculate on these companies and their decision to go public via an ipo or stay private 