While its understandable why some companies, like Facebook, might choose to go public at this stage of their growth, the IPO process itself is costly and time-consuming, and can transform a firm beyond recognition. Facebooks lackluster debut, in May 2012, has only reinforced longstanding concerns that IPOs are primarily being used to enrich a select few within the investment banking community along with their most prized clients, often at the expense of the very companies that the banks are being paid to take public. This article discusses the motivations behind IPOs, how they work in practice, what companies can hope to gain from going public, and, just as importantly, the risks they might face by doing so. It also examines the current state of play in the IPO markets, as well as the possibility of another dot-com bubble taking shape.
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