Secondary Transaction
Definition
A transaction in which existing shares are sold by an existing shareholder to a buyer, without the company issuing new shares or receiving new capital. Secondary transactions provide liquidity to existing shareholders without a primary fundraising event. Secondary transactions do not change the company's cash position or its fully diluted share count unless accompanied by a primary issuance.
Common Misapplication
The most common misapplication is failing to update the cap table when a secondary transaction occurs. A secondary transaction changes the identity of the shareholder holding specific shares and must be reflected in the share register and cap table even though the total share count does not change.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.5: The Liquidation and Exit Mechanics Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Secondary Transaction. https://ffistandard.org/glossary/secondary-transaction/. 2026.