The process of offering shares in a private corporation to the public for the first time is called an initial public offering (IPO). Growing companies that need capital will frequently use IPOs to raise money, while more established firms may use an IPO to allow the owners to exit some or all their ownership by selling shares to the public.
Some people refer to an IPO as a public offering or "going public." There are other ways to go public like a direct listing or direct public offering. When a company starts the IPO process, a specific set of events occurs.
The primary objective of an IPO is usually to raise capital for a business. However, a public offering has other benefits as well.
Some companies will conduct an IPO because of the prestige and credibility it imbues. This may be a factor for future lenders who might be more willing to make loans at more favorable terms if they know the company has a diversified shareholder base and is accountable to the SEC for accurate financial reporting.