Series 79: 6.3.1. Primary Vs. Secondary Offerings

6.3.1. Primary vs. Secondary Offerings

When a company issues and sells new securities to the public, it is called a primary offering. If the company has never issued shares before, an offering of shares is referred to as an initial public offering (IPO). Once a company is publicly traded, it may issue additional stock in a follow-on offering.

Sometimes a major stockholder or bondholder—an institutional investor, perhaps, or a corporate founder—will want to sell a large block of securities, either to diversify its own holdings or to enable other institutions to acquire a significant stake in the company. This is called a secondary offering, and the seller is often referred to as the selling security holder. A secondary o