Secondary offering.
In plain English
In a pure secondary offering, existing shareholders such as founders, employees, or early investors sell their shares to public buyers. The share count does not change and the company receives no proceeds, because the money goes to the selling holders. These offerings are registered and disclosed, so buyers can see who is selling and how much. Large insider sales often draw attention, though holders sell for many reasons including diversification and tax planning. Many deals in practice mix secondary shares with newly issued ones, and the prospectus spells out the split.
01Why it matters
Knowing whether the money from a share sale goes to the company or to insiders tells you whether the business just got funded or whether owners just cashed out.
02The math, step by step
An early investor sells 5 million existing shares at $30, raising $150 million. Every dollar goes to that investor. The company's share count and cash balance are unchanged by the transaction.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
A follow-on offering usually creates new shares, raising cash for the company and diluting existing holders. A secondary offering moves existing shares from one owner to another with no new issuance and no company proceeds. The terms are often used loosely, so the prospectus is the place to check.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice