Going Public Through an Initial Public Offering (IPO) If and when Riordan considers going public with an IPO, the company should first consider selecting and hiring an investment banker, “a person who brings together investors and firms”, even though an investment banker is usually not a banker but instead part of a brokerage firm. An IPO is a way for businesses to bring in new funds by selling securities on the open stock market to willing investors. Depending on the company’s history and stability some brokerage firms will give a “firm Commitment,” guaranteeing a specific amount of securities sold.
For Riordan, considering the option to go public is a good way to bring in new money by seeking investors to buy stock in the company on the stock market and there is potential for substantial growth through public offerings. The decision to go public through an IPO is a risk for Riordan because the company is not known on the market and investors may be hesitant to invest their money in unknown companies. Once the corporation goes public, there may be global effects on financial decisions because an IPO will attract investors from around the world and common stockholders would have some influence on financial decisions made within the company. Because the stock market is volatile, global economic issues can affect market prices that in turn affect stock rates by increasing or dropping without warning, thus affecting the stability of investor’s funds in a corporation.
