Initial public offering — Accounting glossary

An IPO can raise company finance, provide liquidity for existing shareholders and support access to capital markets. The consequences depend on whether proceeds go to the business or selling owners. Costs include professional fees, disclosure obligations, management time and possible changes in control. An offering and admission to trading are related but distinct steps governed by the relevant market's rules. Do not assume every listing raises new funds or that every public offering is an IPO. Pricing and investor demand influence the amount raised and subsequent market performance.

Worked example

A company issues 2 million new shares at $3 and existing owners sell another 1 million. Before costs, the company raises $6 million while the selling owners receive $3 million; the entire $9 million does not fund the company's expansion.

Common mistake

Treating proceeds from existing shareholders selling their shares as new cash raised by the company.

Where it appears in your exams

Qualification	Exam	Relationship	Period
ACCA	AFM	Supporting	September 2026–June 2027
ACCA	FM	Direct	September 2026–June 2027