Complex sentence: Assuming that managers have inside information about the firm, outsiders are most prone to adverse selection in equity offers since managers may offer stock when they know the offer price exceeds their private assessments of the company's value.
Split into simpler sentences: Assuming that managers have inside information about the firm, outsiders are most prone to adverse selection in equity offers. This is because managers may offer stock when they know the offer price exceeds their private assessments of the company's value.