Definition & Meaning:

When a company first starts to sell its share on the stock market (in an 'IPO'), they normally only sell a part of the company's total number of shares (e.g. 30%). The rest of the shares are kept off the stock market in the hands of the original owners/investors and the employees.

If the company in the future decides to allow a lot more of its shares to be traded on the stock market, they do what is called a 'secondary offering'. This increases the percentage of a company's shares (e.g. 60%) which are can be freely bought and sold on the stock market (called in stock market speak the 'public float').

With a 'secondary offering', normally some or one of the original owners sell part or all of their shares to the public through the stock market.

A 'secondary offering' normally happens months or years after a company goes public and first sells its shares in the 'Initial Public Offering (IPO)'.

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Also Called:

Follow-On Offering.

Related Vocabulary:

IPO, Preferred Stock, Common Stock, Dividend.

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