Primary vs secondary share sales: what the data room must cover
In a primary sale the company issues new shares and keeps the money. In a secondary sale existing holders sell shares they already own, and the company receives nothing. Secondary buyers still need company information, so the company usually controls a data room for them, alongside transfer approvals, right of first refusal notices and consents.
Folder index
- 01 Transaction summary Sellers, shares offered, price or process, timeline.
- 02 Company information Latest financials, business update, approved summary for buyers.
- 03 Capitalization Cap table, rights of each class, preference stack.
- 04 Transfer documents Stock transfer agreement, joinders, stock power forms.
- 05 Approvals and ROFR Board approvals, ROFR and co-sale notices, waivers.
- 06 Seller information Restricted per seller: share certificates or ledger entries, tax forms.
- 07 Tender offer documents Offer to purchase, letters of transmittal, holder FAQ if a tender runs.
How this raise works
Secondary sales happen when founders, employees or early investors want liquidity before an exit. They may be one-off sales to a fund, part of a larger primary round, or a company-run tender offer to many holders. Most private company shares carry transfer limits in the bylaws or investor agreements: board approval, a right of first refusal for the company or investors and co-sale rights.
Buyers want enough information to price the shares and meet their own diligence standards, typically the latest financials, the cap table and the rights attached to the class they are buying. The company decides what to share and usually requires an NDA. Sellers who are insiders should consider what they know that the buyer does not, and counsel should check the resale exemption, such as Section 4(a)(7) or the informal Section 4(a)(1-1/2) route, and any holding period.
A company-run tender offer to a broad group of holders can trigger the SEC tender offer rules, with disclosure and timing requirements. The data room then serves both buyers and selling holders, with each group seeing only what it needs.
Best data rooms for this raise
The 16 rooms re-ranked with this raise's weights. Permission control carries the most weight here.
- Investor tracking 19%
- Permission control 23%
- Raise workflow 23%
- Investor onboarding 19%
- Cost of a raise 16%
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Full deal room with AI, a listed price and a 14-day free trial.
Price $149 a month Trial 14-day free trial Features 8 of 12 listed -
Long-running M&A platform with layered permissions and fast support.
Price Priced on request Trial Free trial available Features 9 of 12 listed -
Bank-grade platform for large processes, with AI and a mobile app.
Price Priced on request Trial Demo on request Features 10 of 12 listed -
Deal room with AI and readiness tools for preparing a process.
Price Priced on request Trial Free trial available Features 8 of 12 listed -
Simple flat-rate deal room with signing and Q&A.
Price $250 a month Trial Free trial available Features 8 of 12 listed -
One of the oldest deal rooms, common on bank-led transactions.
Price Priced on request Trial Demo on request Features 8 of 12 listed -
Easy, reliable deal room favored by mid-market advisers.
Price Priced on request Trial Free trial available Features 7 of 12 listed -
Deal room with a listed monthly price and an open API.
Price $299 a month Trial Free trial available Features 7 of 12 listed -
Content cloud with watermarks and signing, priced per user.
Price $15 a user a month Trial Free trial available Features 9 of 12 listed -
European deal room strong in real estate, with AI features.
Price Priced on request Trial Demo on request Features 8 of 12 listed
Places 11 to 16: SmartRoom (7.1), DealRoom (7.0), ShareVault (6.8), Venue by DFIN (6.4), Digify (6.1), DocSend (5.9)
Folder index for the room
A starting index for this raise. Number the folders so the order survives exports and investors can cite them in questions.
- 01 Transaction summarySellers, shares offered, price or process, timeline.
- 02 Company informationLatest financials, business update, approved summary for buyers.
- 03 CapitalizationCap table, rights of each class, preference stack.
- 04 Transfer documentsStock transfer agreement, joinders, stock power forms.
- 05 Approvals and ROFRBoard approvals, ROFR and co-sale notices, waivers.
- 06 Seller informationRestricted per seller: share certificates or ledger entries, tax forms.
- 07 Tender offer documentsOffer to purchase, letters of transmittal, holder FAQ if a tender runs.
- 08 ClosingSigned transfers, payment records, updated cap table.
Features this raise needs
| Feature | Why | Ellty | iDeals | Datasite | Ansarada | SecureDocs | Intralinks |
|---|---|---|---|---|---|---|---|
| NDA e-sign step | Confidentiality terms an investor must accept in the room before folder one appears. | ||||||
| Investor activity log | A per-investor record of opens, pages and minutes, which tells the IR team who is in diligence and who stalled. | ||||||
| View-only files | Files can be read but not saved or printed, and the setting can change mid-raise without a new invite. | ||||||
| Dynamic watermarks | Stamps the reader and a timestamp over every page, so a PPM that leaks carries its source with it. |
Setting up the room
- 01
Read the transfer restrictions
Check the bylaws and investor agreements for board approval, ROFR and co-sale terms before anyone agrees a price.
- 02
Decide what buyers may see
Agree a standard information set with counsel and require an NDA for each buyer.
- 03
Separate buyers and sellers
Buyers see company information; each seller sees only their own transfer documents.
- 04
Run the ROFR notices
Send notices from the room and record each holder's election and the deadline.
- 05
Check the resale exemption
Counsel confirms the exemption and any holding period for the shares sold.
- 06
Update the cap table at closing
Record transfers and file signed documents for the next financing.
Common mistakes
- Agreeing a price before checking the right of first refusal and co-sale terms.
- Giving one buyer company information that others did not receive without an NDA.
- A broad employee liquidity program run without checking tender offer rules.
- Transfers not recorded on the cap table, causing confusion at the next round.
Calculators for this raise
Or take the four-question quiz and check the raise checklist.
Questions and answers
What is the difference between primary and secondary fundraising?
Primary means the company issues new shares and receives the money. Secondary means existing holders sell their shares and the proceeds go to them, not the company.
Can a startup block a secondary sale?
Often it can delay or block it through board approval requirements or a right of first refusal in its bylaws and agreements.
Do secondary buyers get access to the data room?
Usually a limited set controlled by the company, under an NDA: financials, cap table and the rights of the shares being bought.
What is a tender offer in a private company?
An offer to buy shares from many holders at once, often run by the company or a lead investor. Broad offers can fall under SEC tender offer rules.