Question

why companies are anxious to go Public and issue a Initial Public Offering (IPO) to the public. What is the company trying to accomplish?

During  the IPO process why is it that companies going public seek to have TWO classes of stock where the Founders and Officers are able to buy stock from both offerings ?

Answer 1

IPO is often considered a sign of success for a company, or at least mid-way to success. When a company starts their operation, most of the risk, financial or operational, are undertaken by the founders and the early investors. However, over the years as the company grows, there are various validation that the company may seek. However, one of the later validation and the sign of success is IPO for startups and entrepreneurs. This is why companies are anxious to go Public and issue an IPO.

During the IPO process, even though the company raises public money for their capital and future expansion, they attempt to provide the founders and the officers an advantage over the common investors. This is why there are two classes of stocks that are usually issued at IPO. The common stock is the generally traded stock in the market. However, the company also issue preferred stocks to the founders and the officers.