What is a 'General Public Distribution'

A general public distribution is a type of primary market offering in which the securities being issued are available to anyone who has the ability to purchase them. This differs from conventional public distributions of securities in which underwriting investment banks sell large blocks of the issued securities to large investors.

BREAKING DOWN 'General Public Distribution'

If you take part in a general public distribution of securities, you are participating in what is called the primary market: You are buying securities directly from the issuing company, and your funds go to it to finance its business activities. This is in contrast to the secondary market, where investors buy and sell securities from each other, with funds moving back and forth from investor to investor without involving the underlying company at all. The process by which a company makes it shares available for sale to the public is known as going public, and it is used to convert a company from a private firm, or one with no general shareholders, to a public firm, or one with general shareholders.

Why Companies Offer General Public Distributions

Companies usually offer shares to the general public and other investors in order to raise capital to fund expansion, build new facilities, hire new employees, research and develop new products, and buy more equipment. Each share a company sells represents partial ownership of that company. The method of raising money by selling shares through a general public distribution or other primary market is known as equity financing and differs from selling bonds or derivatives.

Advantages of a General Public Distribution

A primary advantage of selling shares on the primary market is that investors’ money goes directly to the company issuing the shares, rather than to another investor selling the shares, as it would on the secondary market. Early private investors may also monetize some or all of their investment in a company by offering their shares as part of the initial public offering (IPO).

A general public distribution allows a company to raise a large amount of money from investors in the marketplace. This can help it diversify and grow its equity base, give it access to cheaper capital, enhance its brand and public image, and help it attract and retain better talent. A general public distribution allows companies to exercise more financing options by making them more attractive candidates for bank loans, and it can smooth the acquisitions process.

  1. Public Company

    A public company issues securities through an initial public ...
  2. Initial Public Offering - IPO

    An initial public offering is when a private company or corporation ...
  3. Public Offering

    A public offering is an organization’s sale of equity shares ...
  4. Offering

    An offering is the issue or sale of a security by a company. ...
  5. Forced Initial Public Offering

    A forced initial public offering is an instance in which a company ...
  6. Distribution

    Distribution occurs when a mutual fund, company or retirement ...
Related Articles
  1. Investing

    The Road To Creating An IPO

    Through an Initial Public Offering, or IPO, a company raises capital by issuing shares of stock, or equity in a public market. Generally, this refers to when a company issues stock for the first ...
  2. Investing

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks, bonds and other securities are traded.
  3. Investing

    The Pros And Cons Of A Company Going Public

    Small companies looking for growth often use an initial public offering to raise capital. But going public brings both advantages and disadvantages.
  4. Investing

    IPOs Are Becoming Less Attractive for Companies

    U.S. companies are choosing to be acquired instead of going public
  5. Investing

    Most Common Probability Distributions

    In this article, we'll go over a few of the most popular probability distributions and show you how to calculate them.
  6. Insurance

    IPOs For Beginners

    IPO is one of the few market acronyms that almost everyone is familiar with. Discover if IPOS are worth all the attention.
  7. Managing Wealth

    How to sell stock in your company

    Read about options and important steps to consider when you're selling, even a small part of your business.
  1. 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 stock in the ... Read Answer >>
  2. After an initial public offering, does a company profit from increases in its share ...

    The short answer is "no." To understand why, you have to know how the market works. Read Answer >>
  3. What's the difference between primary and secondary capital markets?

    In the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investors ... Read Answer >>
Trading Center