The process runs from a confidential draft registration through the public s-1-registration, an ipo-price-range, a roadshow, book-building, pricing the night before the debut, and the first trade the next morning. The underwriter syndicate buys the shares from the company and re-sells them to the investors it chose in the ipo-allocation.
The economics matter to traders in two places. The company raises cash that ends up on the balance sheet, and a large block of pre-IPO stock becomes sellable when the lock-up-period ends, usually 180 days later.
Example: a company sells 20M shares at $28. It raises $560M gross, pays roughly 7% in underwriting fees, and nets about $521M. With 200M shares outstanding after the deal, the IPO valued the whole company at $5.6B while floating only 10% of it.
Related: underwriter, book-building, lock-up-period, direct-listing, s-1-registration