Forced Initial Public Offering - IPO

AAA

DEFINITION of 'Forced Initial Public Offering - IPO'

An instance in which a company is forced into issuing shares to the public for the first time. Forced IPOs occur when a company goes public due to certain conditions being met which are set by the securities regulatory body of the country. Initial public offerings are usually conducted at the discretion of the current management and/or owners of the private company.

INVESTOPEDIA EXPLAINS 'Forced Initial Public Offering - IPO'

The Securities and Exchange Commission (SEC) sets the standards for companies which must go public in the U.S. For example, if the company has a certain amount of assets (around 10 million) and there are more than 500 shareholders of record, the company needs to start disclosing specific financial information publicly and in a timely manner. Some companies might not want to go public because it means increased oversight and reporting standards which usually means increased costs. The reason for the law is to increase transparency and reduce risks for investors.

RELATED TERMS
  1. Death Star IPO

    A company's highly anticipated initial public offering (IPO) ...
  2. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  3. Quiet Period

    In terms of an IPO, the period where an issuer is subject to ...
  4. Shelf Registration

    A regulation that a corporation can evoke to comply with U.S. ...
  5. Pilot Fishing

    A type of pre-marketing of an initial public offering (IPO) that ...
  6. IPO Lock-Up

    A contractual caveat referring to a period of time after a company ...
Related Articles
  1. Retirement

    Pages From The Bad CEO Playbook

    Excess compensation, golden parachutes, tunneling and IPO spinning make these bad executives even worse.
  2. Fundamental Analysis

    How The Sarbanes-Oxley Era Affected IPOs

    After the infamous collapse of companies like Tyco, Enron and WorldCom, the government responded to try and prevent it from happening again.
  3. Mutual Funds & ETFs

    Investing In IPO ETFs

    Learn the history, rules and risks of investing in IPO exchange-traded funds.
  4. Investing

    5 Tips For Investing In IPOs

    Thinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
  5. Investing Basics

    IPO Lock-Ups Stop Insider Selling

    Ownership plays a key role when companies go public. Find out how.
  6. Insurance

    Free Markets: What's The Cost?

    Some argue that when the free market fails to protect consumers, government regulation is required.
  7. Options & Futures

    Greenshoe Options: An IPO's Best Friend

    Find out how companies can save or boost their public offering price with these options.
  8. Investing Basics

    Social Media: High Risk, High Potential Returns

    Carefully selecting social media ETFs can provide you with the opportunity to diversify your portfolio and enjoy financial rewards due to user growth.
  9. Investing Basics

    Understanding Private Placement

    Private placement refers to offering and selling shares in a company to a small group of sophisticated buyers.
  10. Entrepreneurship

    JPMorgan vs. Goldman Sachs: A Tale of Two Stocks

    The performance of JPMorgan and Goldman has been impressive, but one has a slight edge.

You May Also Like

Hot Definitions
  1. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  2. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  3. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  4. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  5. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  6. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
Trading Center