What Does It Really Mean for a Company to Go Public?

You've probably joked about this with a friend before: "I wish that chicken place I always go to would go public!" Then you start imagining buying the shop's stock and making money right alongside the owner. But what does going public actually mean? Today, let's break this word down in the simplest way possible.

What does "going public" mean?

Going public means a company puts its own stock on a market where anyone can buy and sell it. In Korea, that market would be a stock exchange like the KOSPI or KOSDAQ.

Before going public, a company's shares are held only by the founders, employees, and a handful of investors. Regular people can't really buy in even if they want to. But going public changes that. Now even an individual investor like you can buy that company's stock right from a brokerage app.

So what's an IPO?

When people talk about going public, the term IPO always comes along with it. IPO is short for 'Initial Public Offering.' It sounds complicated, but the meaning is simple.

It's the whole process of selling a company's stock to the public (Public) for the first time (Initial) through an offering (Offering), making its market debut. Put simply, it's the company's debut stage as it steps into the stock market for the first time. The shares released for the first time at this point are called IPO shares.

Why do companies go public?

The biggest reason is to raise money. By selling stock to lots of people, a company receives a large amount of funding in return. It can use this money to build factories, hire more people, or take on new businesses.

A public company also gives off the impression of being a trustworthy company. That's because going public requires passing a strict review. So when a company says "we went public," there's also a sense of pride that they've been vetted.

So could my favorite chicken place go public too?

In theory, yes. But not just any company can go public. The company has to be a certain size, it has to transparently disclose how it makes money, and it has to pass the exchange's review.

So it's usually large companies that grow steadily that go public, rather than the local shops we see every day. If a franchise grew big nationwide, then one day we might really hear news of it going public.

Today's recap

Going public is when a company debuts on the stock market, so that individuals like us can buy and sell its stock. That debut process is called an IPO (Initial Public Offering). Now when you see "○○ Company goes public" in the news, you'll know exactly what it means at a glance.