How to Sell Post-IPO Stock

by Leslie McClintock
NYSE stockholders received a tender offer for their shares.

NYSE stockholders received a tender offer for their shares.

When a corporation needs to raise money from the outside to fund continuing operations or expansions, it has two choices: Borrow the money from a bank or by floating a bond, or raise money by collecting it from outside investors. If the company chooses to "go public," it will contact an investment bank, which will invest in the company and then market shares to the public in an initial public offering, or IPO. Before the IPO, shares are only available by purchasing directly into the company. After the IPO, however, shares are available over the stock exchanges. Selling post-IPO stock is not difficult as long as you can find a willing buyer.

1. Open a brokerage account. If all you want to do is sell shares of stock that you own, you can transfer these shares into the brokerage account and then sell them over the Internet.

2. Contact a Series 7-qualified registered representative. If you don't own shares you can electronically transfer to a brokerage account, but instead have the actual stock certificates, a Series 7-qualified registered representative can take possession of these certificates. The broker will either purchase the shares directly from you or contact the company's investor relations to reissue these shares in the "street name." The brokerage company then holds them in its own name on your behalf.

3. Direct your broker to sell at market prices. Once your broker is in possession of the shares, he can sell them by finding a willing buyer.

4. Contact the investor relations department directly. The investor relations department handles communications with the company's owners on behalf of management. The company may be willing to buy shares back from you. It may do this to help create a liquid aftermarket for the company's shares -- especially if company officials believe the shares are significantly undervalued.

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