After completing  an initial public offering (IPO), a company may  decide to offer additional securities, either debt or equity, to the public. These offerings are referred to as “follow-on” offerings because they follow the IPO. There are two different types of follow-on offerings:

• A primary offering is a public offering of securities that is made directly by the company, usually  in an effort to raise additional capital. This kind of offering is referred to as dilutive, because as the new shares are created and sold, the number of shares outstanding increases and this causes a dilution of earnings on a per share basis.
• A secondary offering is a public resale offering by stockholders or other security holders of the company. This is not newly-issued stock, and the offering does not increase the number of shares of stock  outstanding. In a secondary offering, the company does not receive any proceeds; the proceeds go to the stockholders. This type of offering is referred to as non-dilutive because no new shares are created.

Sometimes a follow-on offering consists of both a primary and a secondary offering, such as when a company is registering additional shares of common stock but also allows some of  its stockholders to sell  shares in the same offering. Companies may choose to make follow-on offerings  to raise financing for expanded operations; because they have become cash-deprived and need to finance their current operations; or because they wish to repay debts.

If your company is considering  a follow-on offering, you should consult a corporate attorney who can advise you of the legal issues involved.