An Initial Public Offering (IPO) is the process by which a private company offers its shares to the public for the first time on a stock exchange. IPOs are a critical wealth-creation event: founders, early employees, and investors who held private equity can suddenly liquidate their holdings at publicly determined prices.
Many billionaires have become ultra-wealthy specifically through their company's IPO. When a company goes public, the market assigns a total valuation which, combined with the founder's ownership percentage, determines their net worth on paper.
IPOs are underwritten by investment banks and require extensive regulatory filing. The post-IPO "lock-up period" (typically 6 months) prevents insiders from immediately selling all their shares to avoid market disruption.