The significance of an initial public offering is that stocks become openly traded on some type of exchange/counter and, in this day and age, can be purchased online in an impersonal manner by any investor rather than on some privately negotiated terms that involves communication either directly or through a broker with a person who owns the stock. That’s it.

If anything, an initial public offering is a sign that those who bought shares on the private side now have an eye towards selling their stock and want to open the bidding up to the entire world of investors rather than the narrow subset of investors that deliberately contact the private shareholders.

It follows, then, that the “perfect” IPO, in terms of fairness to public buyers and the formerly private sellers, would be one in which the immediate first day’s trading was 0% or arguably something that mimicked the relevant … Read the rest of this article!