Primary Offering

Primary offering is the initial sale of a company’s stock.  The revenue from the sale of the stock will go straight to the company.  Many companies use this as a way of raising capital because it helps young companies as they are trying to grow.  There are still established companies that use this, but only if they are still private companies. The main type of primary offering is equity financing.

This is when a company sells common stock or preferred stock to investors. It is usually done through an underwriter called an investment banker. The company will give up ownership equity in their business and the underwriter will be responsible for promoting and selling them to the public.

Another method of equity financing is selling the stock directly to investors without using an underwriter. This is called a direct offering.

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