The most common form of secondary offering occurs when an investor, usually a corporation, but sometimes an individual, sells a large block of stock or other securities it has been holding in its portfolio to the public.
In a sale of this kind, all of the profits go to the seller rather than the company that issued the securities in the first place. The seller usually pays all of the commissions.
Secondary offerings can also originate with the issuing companies themselves. In these cases, a company issues additional shares of its stock, over and above those sold in its initial public offering (IPO), or it reissues shares that were issued and have been bought up by the company over time. Reissued shares are known as Treasury stock.
- Browse Related Terms: Floating an issue, Go public, Gross spread, Hot issue, Lock-up period, New Issue, Offering date, Offering price, Oversubscribed, Reverse merger, Secondary offering, Startup