Quora Answer: Why Do Companies Sell Their Shares?

The following is my answer to a Quora question: “Why do companies sell their shares?” 

The primary reason companies issue shares is to raise capital.  The reason for raising that capital could vary, from building up the cash reserves, to strengthening the paid up for financial reasons, to facilitating a partial exit by founders for profit taking. 

Companies also issue shares to secure the commitment of stakeholders, or as part of a share exchange with a key business partner, for strategic reasons. 

Finally, if the business is listed, shares may be sold for compliance reasons, to diversify ownership, or it could simply be to put the company in the news cycle, playing on market sentiment to raise share prices, and the company’s market capitalisation.