Public offering

A public offering is the sale of newly registered securities to the general public, usually managed by an underwriting syndicate of broker-dealers. Unlike a private placement, which is limited to a select group of investors, a public offering requires registration with the SEC and delivery of a prospectus disclosing the issuer's business, finances, and risks.

Public offerings come in several flavors. An initial public offering (IPO) is a company's first sale of stock to the public. After going public, an issuer can raise more capital through an additional or follow-on offering — sometimes called a subsequent primary offering. In a primary offering, the shares are newly created and the proceeds go to the issuer; in a secondary offering, existing shareholders (often founders, early investors, or insiders) sell their shares, and the proceeds go to those sellers rather than the company. A combined offering mixes both.

The primary-versus-secondary distinction matters because it determines who gets the money and whether the share count changes. A primary offering dilutes existing shareholders by adding new shares; a secondary offering does not create new shares — it simply transfers ownership from insiders to the public.

Public offerings anchor the primary market chapters of the SIE, Series 7, and Series 6 exams. Be ready to classify an offering as primary, secondary, or combined based on who sells and who receives the proceeds, and to connect the offering process to prospectus delivery and underwriting roles.