Issuing Corporate Securities - Types Of 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.



Awarding The Issue


Related Articles
  1. Professionals

    C. Underwriting Corporate Securities

    Once a business has decided that it needs to raise capital to meet its organizational objectives, they must determine how to raise the needed capital. Most corporations at this point will hire ...
  2. Professionals

    Secondary Offerings and Shelf Distributions

    Secondary Offerings and Shelf Distributions
  3. Professionals

    Primary Market

    Primary Marketplace
  4. Investing Basics

    What is the Secondary Market?

    The secondary market is where investors purchase securities or assets from other investors, rather than from the issuing companies themselves.
  5. Professionals

    Public Issue And Cash Offer

    These are just two ways that companies can raise capital.
  6. Professionals

    Types of Markets

    CFA Level 1 - Types of Markets. Learn the differences between primary and secondary markets. Looks at where securities are issued and where they will trade after being sold.
  7. Professionals

    New Issue Market

    FINRA Series 6 Exam Study Guide - New Issue Market. In this section: IPOs, underwriter and several kinds of underwriting agreements.
  8. Investing Basics

    What's a Secondary Offering?

    A secondary offering is the issuance of new stock from a company that has already made its initial public offering.
  9. Markets

    Comparing Primary And Secondary Capital Markets

    In the primary capital market, investors buy directly from the issuing company. In the secondary market, investors trade securities among themselves.
  10. Investing Basics

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
RELATED TERMS
  1. Secondary Offering

    1. The issuance of new stock for public sale from a company that ...
  2. Primary Distribution

    The original sale of a new security issue (bonds or stocks) from ...
  3. Public Offering Price - POP

    The price at which new issues of stock are offered to the public ...
  4. Subsequent Offering

    An offering of additional shares after the issuing company has ...
  5. Primary Market

    A market that issues new securities on an exchange. Companies, ...
  6. Lead Underwriter

    A investment bank or other financial outfit that has the primary ...
RELATED FAQS
  1. What is the average range for the price-to-earnings ratio in the electronics sector?

    Understand the difference between the primary market and the secondary market, and learn which investors are able to participate ... Read Answer >>
  2. What is the difference between an IPO and a seasoned issue?

    Learn how companies issue IPO securities when they first go public and seasoned issue shares if they sell more shares in ... Read Answer >>
  3. What is the difference between a primary and secondary financial market?

    Learn about primary and secondary financial markets, how investors use these markets and the difference between primary and ... Read Answer >>
  4. After an initial public offering, does a company profit from increases in its share ...

    The short answer is "no". To understand why, recall that the stock market is actually comprised of two markets - a primary ... Read Answer >>
  5. Do underwriters make guarantees to sell an entire IPO issue?

    Underwriters represent the group of representatives from an investment bank whose main responsibility is to complete the ... Read Answer >>
  6. When does a primary market become a secondary market?

    Understand the difference between the primary and secondary markets and why the secondary market is where investors go to ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center