Initial Public Offering (IPO): It is the first sale of stock by a corporation to the public. The most general reason for a company to start an IPO is in order to elevate more capital. One of the hardest parts of an IPO is to find out the proper price to originally offer the new stock; too big investors won't be interested, however too low and the company is giving up the amount of money which might have been made when they priced it higher. There is usually a noteworthy amount of risk in an IPO, since the company going public is often small or relatively unknown, and hasn't had a chance to confirm itself to the public; as such, they too contain the capacity for significant payoffs.
In an IPO, the issuer acquires the assistance of an underwriting firm that helps it determine what kind of security to issue (that is common or preferred), the best price and the time to bring it to the market.
Also termed to as the "public offering."