A secondary sale is the sale by an existing stockholder of shares in a private company to a third party that does not occur in connection with an acquisition of the company. Secondary sales differ from primary sales because in primary sales, the company sells stock to its investors and keeps the money. In secondary sales, the proceeds of the sale go towards the stockholder and the company doesn’t receive any capital. SPVs are commonly used to aggregate capital to purchase secondary securities from an existing stockholder. Additionally, SPV investors can sell their membership interests in a secondary transaction/sale. Secondary sales can trigger legal and regulatory considerations.
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