On the 25th anniversary of Microsoft's IPO, Fortune is featuring our 1986 cover story in which we followed around a young Bill Gates as he prepared to take his company public. Here's the story of the birth of a billionaire.

Editor's Note: This story was first published in the  July 21, 1986 issue of Fortune. As Bro Uttal told Fortune's editor, Marshall Loeb, at the time (see Editor's Letter at the bottom of this page), "I doubt that a story like this has been published before or is likely to be done again."

By Bro Uttal, writer

Going public is one of capitalism's major sacraments, conferring instant superwealth on a few talented and lucky entrepreneurs. Of the more than 1,500 companies that have undergone this rite of passage in the past five years, few have enjoyed a more fren- zied welcome from investors than Microsoft, the Seattle-based maker of software for personal computers. Its shares, offered at $21 on March 13, zoomed to $35.50 on the over-the-counter market before settling back to a recent $31.25. Microsoft and its shareholders raised $61 million. The biggest winner was William H. Gates III, the company's co-founder and chairman. He got only $1.6 million for the shares he sold, but going public put a market value of $350 million on the 45% stake he retains. A software prodigy who helped start Microsoft while still in his teens, Gates, at 30, is probably one of the 100 richest Americans.

Gates thinks other entrepreneurs might learn from Microsoft's (MSFT) experience in crafting what some analysts called ''the deal of the year,'' so he invited FORTUNE along for a rare inside view of the arduous five-month process. Companies hardly ever allow such a close look at an offering because they fear that the Securities and Exchange Commission might charge them with touting their stock. Answers emerged to a host of fascinating questions, from how a company picks investment bankers to how the offering price is set. One surprising fact stands out from Microsoft's revelations: Instead of deferring to the priesthood of Wall Street underwriters, it took charge of the process from the start.

Bringing the road show to New York City, Microsoft Chairman Bill Gates explains the future of personal computers to institutional investors.

The wonder is that Microsoft waited so long. More