Is one of the many methods to identify and attract new investors, this is to invite the public to invest in the company by purchasing the shares.

This is mainly done when the company expansion will need a great deal of money, and when it is complicating to raise the required funds from friends and relatives.

The easiest and pretty commonly used method to raise funds is by inviting the public to buy the stocks from the company.

This is known as the initial public offering (IPO).

A company looking to issue stock to the public publishes a booklet, known as the prospectus.

The prospectus provides with the complete and detailed description of all the business aspects of the company.

It will consist of the names of the founders, the educational credentials and skill levels of the company’s senior professionals, the products which are manufactured by the company, a detailed description of all of the company’s capital strength, the range of its sales, the net income of the company, and several other details, which is related to the business of the company.

Apart from this, the company will also describe about how they are planning to use the funds they are trying to raise by selling shares for stock.

The prospectus provides the probable investors with the detailed picture of the company, which they can study prior to making their investment decisions.

An accountant and a lawyer will be signing the prospectus as a method of attesting that they have verified the validity of all of the information which has been provided in the document.

A company which misleads the public in any method will be liable to prosecution by law in their jurisdiction.

When an investor is positive about the prospectus of the company and if they are sure of the future growth potential of the company and if they feel that the stock price provided there in is reasonable, then the investor will purchase the shares which are being issued.