Glossary of most frequent business formation terms

A B C D E F G H I J L M N O P Q R S T U V W

-G-

Going private

Going public

Guarantee

 

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Going private

It is when a private group replaces publicly owned stock in a firm with complete equity ownership. The firm is delisted on stock exchanges and can no longer be purchased in the open markets.

 

Going public

When a private company first offers shares to the public market and investors. Also called Initial public offering (IPO). Securities offered in an IPO are often, but not always, those of young, small companies seeking outside equity capital and a public market for their stock. Investors purchasing stock in IPOs generally must be prepared to accept considerable risks for the possibility of large gains. IPOs by investment companies (closed-end funds) usually include underwriting fees that represent a load to buyers. Opposite of going private.

 

Guarantee

A legally enforceable promise to become liable for the debt of another if the liable party fails to perform to expectations.  Most bank loans to corporations are backed by the personal guarantee of the shareholder's of the corporation.  If the corporation defaults on the debt, the shareholders are then personally liable to pay the debt on behalf of the corporation.