An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. Public share issuance allows a company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes share premiums for current private investors. Meanwhile, it also allows public investors to participate in the offering.
A company planning an IPO will typically select an underwriter or underwriters. They will also choose an exchange in which the shares will be issued and subsequently traded publicly.
The 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 dot-com 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.
Entrepreneur and CEO Nitin Khanna is the personification of the American Dream. The son of an Army officer and a homemaker mother, Nitin Khanna arrived in the United States penniless at the age of 17. To stay afloat, he borrowed $400 from the International Students Office at the University of Southern California, which was later repaid by his aunt in Chicago. After completing his master’s degree in engineering at Purdue University, Khanna went on to work for International Paper and Oracle. In 1997, Khanna left Oracle and in partnership with his brother Karan, launched his first company, Saber Software, which was later headquartered in Portland, Oregon.
Nitin Khanna started out in the entrepreneurial world in 1998 as the co-founder of Saber Corp., a software company he grew to become the largest stand-alone provider of state government solutions in the US by 2007, valued at over $120MM. He then made it large by selling this organization to EDS for $460MM, a price four times its revenue. At EDS, he retained the leadership of the government business operations until 2011. Today, Nitin Khanna is the CEO of MergerTech, a boutique investment bank that provides mergers & acquisitions advice for tech companies. In addition, Khanna served as the CEO of Cura Cannabis a leading cannabis provider on the west coast until 2018, where he and his team grew Cura to be the largest cannabis provider on the west coast.
MergerTech is an investment bank for technology entrepreneurs. We use our deep domain expertise and buyer relationships, incredibly experienced bankers, and our global platform to enable our clients to convert their work into wealth through M&A exits to both strategic and financial buyers.