Jun 30, 2023
Type of Secondary Transactions
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
There are several types of secondary transactions as follows:
Confidentially marketed public offerings -- these offerings go to institutional investors.
These transactions use an S3 form to provide shares to known buyers.
Bought deal -- these shares are bought by an underwriter who takes the risk of the transaction.
Since the risk is shouldered by one underwriter the shares are typically priced higher.
PIPEs -- these are Private Investments in Public Entities and give private investors the ability to buy shares directly in the company without public disclosure.
PIPEs are more heavily discounted.
Block trades -- these are transactions used by smaller sellers to sell their shares directly to another buyer without having to go through an underwriter.
These transactions provide alternative ways of completing a secondary sale.
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