Follow-on Offering

A follow-on offering is when a company that's already publicly traded issues and sells new shares to raise more cash. Think of it as a second (or third, or tenth) round of fundraising after the company's initial public offering, or IPO. You'll see these announcements in financial news, and they matter because they dilute existing shareholders—your ownership slice of the company gets smaller when new shares are created. For example, if TechCorp issued 10 million new shares last year and now issues 5 million more, each existing share represents a smaller piece of the company. Companies do this to fund expansion, pay off debt, or make acquisitions.