Secondary Markets Intermediate

Secondary Buyer

An investor or fund that purchases private company shares from existing shareholders.

Definition

A secondary buyer is any investor who purchases shares from existing shareholders rather than directly from the company. Secondary buyers include specialized funds, family offices, high-net-worth individuals, and institutional investors. They typically purchase at a discount to the last funding round price and must usually be approved by the company. Some secondary buyers focus specifically on pre-IPO companies with high growth potential.

Why it matters

Secondary buyers provide the demand side of the secondary market. If there is strong buyer interest in your company's shares, you have a better chance of selling at a fair price. Low buyer interest means steeper discounts or no ability to sell at all.

Example

A secondary fund offers to buy your 10,000 shares at $30 each (the last round was $40). They are purchasing shares from 5 different employees totaling $2M in transactions. The company must approve each transfer.

Related terms

Secondary Market
A marketplace where private company shares are bought and sold between investors.
Secondary Sale
Selling your private company shares to another investor, providing liquidity before an exit.
Qualified Purchaser
An investor with $5M+ in investments, meeting a higher threshold than accredited investor.
Transfer Restriction
Rules that limit or prohibit shareholders from selling or transferring their private company shares.
Broker (Secondary Market)
A licensed intermediary who matches buyers and sellers of private company shares.
ROFR (in Secondary Context)
The company's contractual right to buy your shares at the offered price before any outside sale.

More from Secondary Markets

This definition is an educational summary. It is not legal, tax, or investment advice. Specific terms in your equity grant or company documents may differ.