What is a Public Offering?

Answer:
A public offering is an offer of new securities to

the public. When a company goes from public to private, they must first register with the SEC and come up with a public offering price that is agreed upon by investment bankers and the issuing company.

These investment banks underwrite the public offering by committing to the issuing company that a specific amount of shares will be sold at the specific price.

The term public offering also refers to a secondary issue of securities that have previously been issued. Because public offering can be used to refer to the initial public offering and a secondary offering, you will often hear the term “initial public offering” or IPO used when a new company offers its shares for sale for the first time.

Public offerings can be done by large, established private companies that want to become publicly traded as well as small companies who are looking for capital in order to expand. Investors may have very little historical data to use when making their decisions, especially when the public offering is by a young, small company.


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