Initial Public Offering (IPO)

The first sale of a company's shares to the public, after which the shares trade on a stock exchange.

Example

A company lists at 20.00 per share and early investors' preferred shares convert to common.

Early investors usually receive shares subject to a lock-up, not cash, and the price can change substantially before they can sell.

Lock-up period — A contractual period during which you cannot withdraw money from a fund or sell a holding, however much you might want to.
Liquidity Event — The point at which a private company's equity can actually be converted into cash - most often an acquisition or an initial public offering, occasionally a documented secondary sale.

Acquisition, listing, secondary sale or wind-down - most exits are the first and the last — Private investments return money through a sale of the company, a public listing, selling shares to another investor, or a wind-down. Public listings are the most visible and among the least common outcomes. (9 min)
A listing gives you shares you cannot sell yet, at a price that can fall before you can — After an IPO, early investors typically hold shares subject to a lock-up period. The price at listing can change substantially before they are free to sell. (10 min)