Definition
Secondary shares refer to shares of a company that are sold by existing investors rather than the company itself, typically in private or public markets.
Related Services
Secondary share transactions occur in venture capital, private equity, and mergers and acquisitions, allowing early investors or employees to liquidate their holdings.
Problem and Application
While secondary shares provide liquidity, they do not generate new capital for the company. Mismanagement of secondary transactions can lead to valuation discrepancies and investor conflicts.
Conclusion
Secondary share sales are an important tool for investor liquidity but require careful structuring to align with company and shareholder interests.
