What is the main purpose of an Initial Public Offering (IPO)?

The primary purpose of an Initial Public Offering (IPO) is to enable companies to raise capital from public investors. This process allows a private company to transition into a public company by offering shares of stock to the general public for the first time. By doing so, the company can gather substantial amounts of funds that are critical for various growth initiatives, such as expanding operations, investing in new technology, or paying off existing debt.

Through an IPO, the company gains access to a larger pool of investors beyond its private circle, thereby enhancing its financial resources and market visibility. This capital-raising aspect is crucial for companies looking to scale and achieve long-term strategic goals. Although other elements such as providing liquidity for existing shareholders and creating exit strategies are associated with IPOs, they are secondary to the fundamental objective of capital acquisition for the company's growth and development.