when a company initiates the ipo process a very specific set of events occurs first an external ipo team is formed consisting of an underwriter lawyers certified public accountants cpas and securities and exchange commission sec experts next information regarding the company is compiled including financial performance and expected future operations this becomes part of the company prospectus which is circulated for review 
sometimes companies will issue what is known as a shelf prospectus detailing the terms of multiple types of securities that it expects to offer over the next several years the financial statements are then submitted for official audit and the company files its prospectus with the sec and sets a date for the offering ipos as well as any other type of stock or bond offering can be a risky investment for the individual investor it is tough to predict what the stock will do on its initial day of trading and in the near future there is often little historical data to use to analyze the company also most ipos are for companies that are going through a transitory growth period which means that they are subject to additional uncertainty regarding their future values ipo underwriters work closely with the issuing body to ensure an offering goes well their goal is to ensure that all regulatory requirements are satisfied and they are also responsible for contacting a large network of investment organizations in order to research the offering and gauge interest to set the price the amount of interest received helps an underwriter set the offering price the underwriter also guarantees a specific number of shares will be sold at that initial price and will purchase any surplus secondary offeringsa secondary market offering is a large block of securities offered for public sale that have been previously issued to the public the blocks being offered may have been held by large investors or institutions and the proceeds of the sale go to those holders not the issuing company also called secondary distribution these types of offerings are very different than initial public offerings and don t require nearly the same amount of background work non initial public offerings vs initial public offeringssometimes an established company will make offerings of stock to the public but such an offering will not be the first offering of securities for sale by that company such an offering is known as a non initial public offering or seasoned equity offering 