Overview

It is an oft-repeated clich in business that for a company to survive it must grow. It must grow its market share. It must grow its customer base. It must increase its R&D spending in order to find new products or new uses for existing products. It must increase its manufacturing capacity in order to make the products. And then it must market and distribute these products.

All of this takes money. And lots of it. One of the most tried and tested methods of raising cash is through an initial public offering. An initial public offering (IPO) is, as it sounds, the first sale of a company's shares to the public and the listing of the shares on a stock exchange. In the UK, IPOs are often referred to as flotations.

Many companies need more cash than provided by an IPO. They return to the stock market in secondary offerings or rights issues. While not as monumental as the first decision to go public, any decision to raise equity is not taken lightly.

Issuing companies are not the only parties that raise money on the stock market. Existing shareholders may decide to offload their holding either in the IPO or secondary offering. The existing shareholder may be an individual, venture capital firm, parent company or even a government, in the case of privatizations.

Whoever is raising the funds, the process of flotation is arduous, involves significant time commitments from the company's management and advisors (investment bankers, stockbrokers and...