Flotation

Dictionary Says

Definition of 'Flotation'

The process of changing a private company into a public company by issuing shares and soliciting the public to purchase them. Flotation allows companies to obtain financing from outside the company instead of using retained earnings to fund a new project or expansion. The term "flotation" is commonly used in the United Kingdom; the term "going public" is more widely used in the United States.

Investopedia Says

Investopedia explains 'Flotation'

Flotation requires careful considerations regarding timing, company structure, the company's ability to withstand public scrutiny, increased regulatory compliance costs and the time involved in effecting the flotation and attracting investors. While flotation provides access to new sources of capital, flotation costs - the expenses associated with issuing new stock - must be accounted for when consider the switch from private to public company. Flotation costs mean it is more expensive to finance a project with new shareholder capital than with retained earnings.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Corporate Finance

    1) The financial ...
  2. Initial Public Offering - IPO

    The first sale ...
  3. Private Equity

    Equity capital ...
  4. Impact Day

    The date on ...
  5. Direct Public Offering - DPO

    When a company ...
  6. Muppet Bait

    Naive investors ...
  7. Gross Spread

    The difference ...
  8. Absorbed

    1. In a general ...
  9. Standby Underwriting (Standby)

    A type of ...
  10. New Issue

    A reference to a ...

Articles Of Interest

  1. How An IPO Is Valued

    The initial valuation of an IPO can determine the success or failure of a specific stock - but how is that price determined?
  2. 5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  3. Greenshoe Options: An IPO's Best Friend

    Find out how companies can save or boost their public offering price with these options.
  4. Investing In IPO ETFs

    Learn the history, rules and risks of investing in IPO exchange-traded funds.
  5. The Ups And Downs Of Initial Public Offerings

    Initial public offerings aren't the best option for every company. Consider these factors before "going public."
  6. Who gets a copy of an IPO's greensheet and why?

  7. What does 'going public' mean?

  8. The Fundamental Mechanics Of Investing

    Here's a story that demonstrates why stocks and bonds were created and how they are valued.
  9. Cashing In On The Venture Capital Cycle

    Find out how VC firms make the market go round, and round and round.
  10. Spotting Sharks Among Penny Stocks

    To protect yourself from an attack, don't swim in this ocean.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center