Public Offering

Business, Legal & Accounting Glossary

Definition: Public Offering


Public Offering

Quick Summary of Public Offering


A public offering is an invitation to participate in a debt or equity offering that extends to the public. In the US, a public offering must comply with an extensive set of securities law and associated SEC rules. Moreover, additional laws governing a public offering exist at the state level. In contrast to a public offering, a more limited offering or an investment opportunity is known as a private placement. Like the public offering, a private placement is ordinarily regulated by securities law, but some exceptions are made for the accredited investor. In the equity markets, when a company goes public, the first public offering of stock is known as an initial public offering or IPO. Following the initial public offering, a company’s stock is publicly traded, generally on a stock exchange. The IPO is certainly the most glamorous and closely followed type of public offering.




Full Definition of Public Offering


Public Offering refers to a sale of company securities that is registered with the federal Securities and Exchange Commission (SEC) and state blue sky commissions. It is an offering and subsequent sale of company securities that does not rely on an exemption from the 33 Act’s registration requirements. Shares issued in a public offering are freely tradable (unless they are otherwise restricted because the holder is an insider).

Public offerings generate needed cash but are expensive and time-consuming to conduct. They also subject the company to ongoing reporting and disclosure requirements with the SEC. At the same time, however, they create a market of freely tradable company securities that the company can use to raise capital in the future and that management or employee-shareholders can use to convert their holdings into cash. Having publicly-traded stock makes company shares in employee incentive plans more attractive because the shares are easier to convert into cash.

An active market for company shares makes it easier for a company to expand its activities through the acquisition of other businesses. Because they are readily convertible into cash, registered company shares can often be used instead of cash to acquire a company. With the proper deal structure, registered company shares can also be used to ease the immediate tax burden of a seller caused by his company’s sale and make the acquisition easier to close.


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Definition Sources


Definitions for Public Offering are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 30th December, 2021 | 0 Views.