Series 79 practice questioneasyFollow-On Offerings
Which of the following is most often a reason for a company to do a follow-on (secondary) offering?
- ATo reduce the number of outstanding shares
- BTo raise additional capital after the IPO✓ Correct answer
- CTo conduct due diligence on underwriters
- DTo satisfy syndicate members’ requests
Explanation
Why B — To raise additional capital after the IPO
Companies use follow-on offerings to raise more capital after the initial public offering. Reducing shares or syndicate requests are not primary reasons, and due diligence is a process, not a motivation for the offering.
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