Secondary Public Offering

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Secondary Public Offering

Any issue of stock after the initial public offering. That is, in a secondary public offering, a company sells shares that it has not previously issued. This increases the number of shares outstanding, which can (though does not always) lead to dilution of share value. A secondary public offering occurs on the primary market and therefore should not be confused with secondary market transactions.
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In addition, say financial experts, the confidentiality inherent in a PIPE keeps a small-cap or micro-cap company from being hammered by short sellers who reportedly lie in wait for companies announcing secondary public offerings. "Not only is the process [of a secondary public offering] time-consuming," says Luke Iovine, a law partner at Paul Hastings Janofsky & Walker in New York, "but if the market is aware that a large block of stock is forthcoming, that could be viewed adversely because it has a dilutive effect."
An important advantage of PIPEs is that they can be done more quickly, cheaply and confidentially than a secondary public offering, which requires registration up front and a more elaborate investor road show.
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