The first sale of a company's shares to the public — transitioning from private to public ownership and raising capital by offering new or existing shares on a stock exchange.
Deeper Explanation
Lynch's rule on IPOs: "It Probably's Overpriced." The IPO market systematically favours the seller (the company and its venture backers) over the buyer (public investors). Investment banks set IPO prices after gauging institutional demand — they leave just enough on the table to generate a first-day "pop" that attracts retail buyers, but the pricing process is designed to maximise proceeds to the seller. Long-term IPO research consistently shows that the average IPO underperforms the broad market over 3–5 years. The exceptions — the IPOs that become long-term wealth creators — are identifiable by: strong unit economics at IPO, exceptional management, and a long growth runway priced at a reasonable entry multiple.
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Go deeper into the Growth school — frameworks, case studies, and decision systems.