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DIRECT PUBLIC OFFERINGS

DEFINITION of 'Direct Public Offering - DPO'

When a company raises capital by marketing its shares directly to its own customers, employees, suppliers, distributors and friends in the community. DPOs are an alternative to underwritten public offerings by securities broker-dealer firms where a company's shares are sold to the broker's customers and prospects.

BREAKING DOWN 'Direct Public Offering - DPO'

Direct public offerings are considerably less expensive than traditional underwritten offerings. Additionally, they don't have the restrictions that are usually associated with bank and venture capital financing. On the other hand, a DPO will typically raise much less than a traditional offering.

Why go public?

The long term benefits of being publicly traded are numerous and can include: improved liquidity, higher company value, the ability to make acquisitions or attract and retain employees with the newly public companies stock and greater access to capital at a lower cost. In addition, having public trading status allows a company the ability to make acquisitions with their stock, since publicly traded stock is viewed as currency for mergers and acquisitions. More over, public trading status often leads to a higher price for a later offering of a companies securities.