TLDR:
A secondary sale is the transfer of private company shares from existing shareholders (founders, employees, early investors) directly to new investors, providing liquidity without the company raising new capital.
Secondary Market Mechanics
Private company secondary transactions require navigating complex legal restrictions. Most startup stock purchase agreements include rights of first refusal (ROFR) provisions requiring the seller to first offer shares to the company and/or existing investors before selling to third parties. Transfer restrictions may also require company consent. Tender offers on secondary platforms often involve a ‘clean-up’ mechanism where the company and investors are offered a chance to exercise ROFR before the shares go to the marketplace buyer, adding time and complexity to what might otherwise be a simple bilateral transaction.