Secondary Market Offering

A secondary market offering refers to the sale of shares by existing shareholders, such as institutional investors or company insiders, after the company has gone public. In a secondary offering, no new shares are created; instead, existing shares are sold to new investors. This differs from a primary offering, where new shares are issued to raise capital. Secondary market offerings allow existing shareholders to liquidate their positions without diluting ownership for current shareholders.

Example

A company’s early investor decides to sell part of their stake in the company through a secondary market offering after the company has already gone public.