Secondary Offerings

A secondary offering involves companies that sell their shares after completing an IPO. In secondary offerings, the capital gained from selling the shares goes to the shareholder rather than the company. Shares involved in secondary offerings have been sold a second time─first to the shareholder, and then to other investors.

Non-Dilutive and Dilutive Offerings

Secondary offerings are separated into two types: dilutive and non-dilutive. In a dilutive offering, a company creates new shares and their old shares dilute; dilution occurs when a company’s shares increase and as a result, the percentage of ownership of shares decreases. Investment banks (IBs) help you sell these new securities. These offerings are an effective way to raise capital, thus increasing a company’s overall value after your IPO. Often, companies funnel the raised capital back into the business to facilitate its growth.

In a non-dilutive offering, major shareholders sell their stock in a company after completion of an IPO. Non-dilutive offerings do not involve the creation of new shares; instead, shareholders sell their existing stock hoping to gain a profit. Also keep in mind that this type of secondary market offering does not benefit the issuer. Rather, the shareholder profits by selling the shares they bought from the issuing company to another investor. Non-dilutive secondary offerings are a viable exit strategy for current investors in the issuing company. Those who own existing or used shares that they acquired on the primary market, sell their stock to other investors on the secondary market to raise capital.

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Benefits

Issuer Consulting’s advising services ensure that a secondary offering is the best decision for your company. As your consulting firm, we will:

  • Discuss the benefits and drawbacks to conducting a secondary offering post-IPO
  • Explore the consequences of dilution of your company’s stock following a dilutive secondary offering and discuss how to address them
  • Pair issuers with reputable investment banks that will effectively sell the company’s newly issued shares
  • Determine if a secondary offering is the best option for investors or issuers
  • Explain and ensure your compliance with the many requirements of secondary offerings
  • Plan your secondary offering as an exit strategy, maximizing your potential profit
  • Ensure you are compliant with the SEC by advising you on all of their required documents

Help You Maintain Compliance

Ensure that you comply with the necessary forms to conduct secondary offerings

Partner

Pair you with professional, respected investment banks that will facilitate your sale of securities

Discuss

Familiarize you with the advantages and disadvantages of secondary offerings as well as the consequences of a dilutive offering

Our seasoned representatives are experts on secondary offerings. We will discuss how they can benefit your company and ensure your regulatory compliance. Further, we can find an optimal, reputable investment bank that prioritizes your needs throughout the secondary offering process. Above all, our professional consulting services will streamline the complex process and decision-making involved with conducting any secondary offerings. Contact us to schedule a consultation.

Contact Issuer Consulting today!