So, I know how an IPO works and I know plenty about securities and such, but while thinking about something, I came across a question that seemed basic but is actually much more complex than it sounds. How does a company make money from the IPO?
Well, investors invest, I get that, but isn't 100% of the company owned by previous investors before it goes public? Yes, so wouldn't ALL of the funding go to the investors as opposed to the company?
If I start a company called "X", I own 100% of it. After a few years, I decide to take it to the market, it's worth $10,000,000, so I sell, for the sake of the example, 10,000 shares ($1000 per share). Wouldn't the sale money go to my pocket as seen that I'm the owner? How would the company benefit from the IPO since it gets no funding but the owners do?
I really feel like this has a very basic/stupid answer that I'm missing, but I just can't wrap my head around it.
Submitted July 09, 2017 at 01:29AM by NicolasDegreas http://ift.tt/2tCr253
