In an initial public offering (IPO), the corporation gains money by selling shares of the company to investors for the first time. Here's a breakdown of who gains money during an IPO:
1. The corporation: The primary beneficiary of an IPO is the corporation itself. By offering shares to the public for the first time, the company raises capital that can be used for various purposes such as expanding operations, funding new projects, paying off debt, or investing in research and development.
2. The stockholder: While the corporation gains money through the sale of shares, individual stockholders who choose to sell their existing shares during the IPO may also benefit by realizing a profit if the share price increases from the IPO price.
3. The bondholder and partnership do not directly gain money during an IPO. Bondholders are creditors of the company who receive interest payments and the return of the principal amount at maturity, which is independent of the IPO process. Partnerships operate differently from corporations and do not issue shares to the public in the same way as a publicly traded company.
Therefore, during an IPO, the corporation and potentially individual stockholders can gain money, while bondholders and partnerships are not directly involved in this process.
