A private placement is the sale of securities to a small group of select investors as a way of raising capital while avoiding key disclosure requirements. The target investor audience for private placement deals are accredited investors who earn at least $200,000 annually or whose net worth exceeds $1 million and institutional buyers like large banks, mutual funds, insurance companies, and pension funds.
Both public and private companies can either sell equity shares or bonds through the private placement while taking advantage of some key benefits;
- The company does not have to pay high underwriting fees
- The business is dealing with sophisticated investors that can help structure a more complex deal
- The company does not have to disclose as much about its business to the SEC compared to an IPO
- For privately placed bonds, no credit rating is required thus saving the company time and money
There are many questions that will be answered in this video;
- What are private placements?
- How can public companies use private placements?
- How can private companies use private placements?
- What advantages do investors receive when investing in private placements?
- What is Rule 144A?
- What are the filing and holding requirements for privately placed securities in Canada & US?
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