Once approved, the company would transfer its shares directly to the relevant exchange. In order to bypass the traditionally expensive and drawn-out process, the SEC allows companies to submit a confidential draft of their IPO registration statement and work out any issues prior to releasing their financial statements to public scrutiny. This type of listing also allows insiders to sell shares immediately, foregoing the usual waiting period.

A DPO also prevents the dilution of existing shares that occurs with a traditional IPO, allowing for insiders, employees, and early investors to obtain the most benefit from the filing. The other important distinction is that the offering doesn't result in the issuing of any new shares, so it doesn't raise capital for the listed company. Investment banks that handle a standard IPO typically charge millions to orchestrate the filing and withhold shares at the listing price to be sold later. The biggest benefit afforded by this type of filing is the cost savings for the company. A direct listing eliminates much of the pomp and circumstance associated with a traditional IPO.

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