A document issued by a company that is about to sell stock to the public. Prepared with the help of lawyers and other high-priced advisers, the prospectus is must-reading for investors. It discloses a wealth of information about the business of a private company, much of it not previously made public. This includes financial data, background on the top executives, information on pending litigation, details of the offering itself (what proportion of ownership is being sold, what will happen to the proceeds), and risk factors to consider before investing (competition in the industry, barriers to entry, etc.).



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