Capital Structure - Secondary Stock offering

11/4/14

Secondary Stock options/capital structure

Topic Summary 2: Secondary Stock Offerings

A secondary stock offering is when a company issues new stock for public sale after it has made its initial public offering. The purpose for a secondary stock offering is to raise capital and increase the number of shares outstanding. This helps lead to company growth, as well as helps majority shareholders to decrease their ownership in the company.

There is one common trend for all secondary stock offerings, and that is the fact that share prices fall following a secondary offering. Essentially, there are two types of secondary stock offerings. The first type’s objective is to raise capital to grow the business, reduce outstanding debt, or position the company to make strategic acquisitions. Meanwhile, secondary stock offerings can also be useful in enabling insiders of the company to sell shares to the public. This type dilutes the market price due to the increased number of shareholders.

The first class presentation was my group, Hilton Worldwide. In my opinion, we did a good job of utilizing graphs and tables to explain Hilton’s secondary offering. We gave a lot of background information to further familiarize the audience with the well-known hotel and resort chain. One thing that particularly stood out to me was how many different hotels and resorts Hilton owns and runs across the world. The Hilton brand is recognized worldwide, as it currently has hotels in six of the seven continents and seventy-eight countries.

The next class presentation was Sprouts Farmers Market. This presentation intrigued me, because it wasn’t a well-known company like Hilton. Prior to the presentation, I hadn’t heard of Sprouts Farmers Market. Despite presenting the required material, this group could have made it more interesting. They didn’t provide many visual aids like graphs or tables, but instead listed most of the information presented. It was interesting to hear about another healthy grocery store like Whole Foods, but it could’ve been presented better.

The next group did a fantastic job presenting Kona Grill. They used several graphs and tables which made the presentation easier to keep up with, along with very informative facts that coincided with their visual aids. They made a good comparison of Kona Grill,