Securities that are being sold under a prospectus may include securities that are part of different types of offerings. The different types of offerings include initial public offerings, subsequent primary offerings, and registered secondary offerings.

Initial Public Offering (IPO) / New Issue

An initial public offering is the first time that a company has sold its stock to the public. The issuing company receives the proceeds from the sale minus the underwriter’s compensation.

Subsequent Primary / Additional Issues

In a subsequent primary offering, the corporation is already publicly owned and the company is selling additional shares to raise new financing.

Primary Offering vs. Secondary Offering

In a primary offering, the issuing company receives the proceeds from the sale minus the underwriter’s compensation. In a secondary offering, a group of selling shareholders receives the proceeds from the sale minus the underwriter’s compensation. A combined offering has elements of both the primary offering and the secondary offering. Part of the proceeds goes to the company and part of the proceeds go to a group of selling shareholders.

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