Explain the method of Offer of Sale

Method of offer of sale consists in outright sale of securities through intermediary of issue houses or share brokers. In other words, shares aren't offered to the public directly. This methods comprises two stages:

(i) First stage is a direct sale by the issuing company to the issue house and brokers at an agreed price.

(ii) In second stage, intermediaries resell the above securities to ultimate investors. The issue houses or stockbrokers buy the securities at a negotiated price and resell at a higher price. Difference between in the purchase and sale price is known as turn or spread.