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What are Private Placements

Updated on April 16, 2012

Private Placements

Private Placements. What are Private Placements? Are a funding round of securities sold without a public offering. Sold usually to a small select group of people. In the United States these placements are subject to the securities act of 1933. Most Private Placements are offered under the rules known as regulation D. What is Regulation D? An offering to sell securities must either be registered with the SEC [Securities Exchange Commission} or meet an exemption. They may consist of stocks, shares of common stocks, are preferred stocks. The other forms are membership interest , warrants , or promissory notes, including convertible promissory notes. Purchasers are often institutional investors such as banks, insurance companies, or pension funds. The Private Investor market is an attractive alternative for investors and small businesses,since the stock market has limited infusion capital. Regulation D is the most used for Private Placements.

Private Placements are Private Capital means the same thing. It is money invested in bonds are sometimes invested in stocks.

What are the benefits for Private Placements .Usually has a higher degree of flexibility when it comes to financing..Usually ranging from 100 thousand to 10 to 20 million. .Combinations of equity, debt, and equity capital. .Investors are seeking a return of 10 to 20% over a period of 5 to 10 years. .This is much lower than venture capitalist or selling stock to the public people. This is called an IPO Initial Public Offering If your company is looking for growth or development or expansion you might be a candidate for private placement . Most companies get started with angel investors.

What is needed for private placements?

1 sound business plan and proforma of your company. 2.A Private Placement memorandum explaining the business plan and performance of your company is needed. 3A lawyer dealing in Private Placements is needed.

Where do I find Private Placements?

Accredited Investors defined by the SEC rule 501-Regulation D.

1Individuals earning 200 K a year. 2Households having a net income over a million dollars or earning 300 K yearly. 3Some banks venture bonds or some other institutions.

Private Placements can be great if you don't wish to go public with your company. Private Placements usually don't offer a public offering.

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    anonymous 6 years ago

    Great article

  • profile image

    Eric Musch 6 years ago

    Great article. Beware some private placements are scams.

  • profile image

    anonymous 6 years ago

    Most private placements are scams. great blog

  • katiem2 profile image

    katiem2 6 years ago from I'm outta here

    Great to learn something new about private placements. Thanks :)

  • Rhonda Waits profile image
    Author

    Rhonda Musch 6 years ago from The Emerald Coast

    Thank you Katiem2 for your comment.

  • profile image

    anonymous 6 years ago

    I lost my money in a private placement. Great article.

  • profile image

    anonymous 6 years ago

    Wow its hard to believe but you learn something new everyday. Thanks.

  • profile image

    Joy Dans 6 years ago

    Great article about[PP's] I didn't know that. Thanks

  • Rhonda Waits profile image
    Author

    Rhonda Musch 6 years ago from The Emerald Coast

    Thanks Joy Dans for your comment. I am glad you enjoyed my article.

  • DREAM ON profile image

    DREAM ON 6 years ago

    New knowledge and tips to make me understand the business world a little better.

  • Rhonda Waits profile image
    Author

    Rhonda Musch 6 years ago from The Emerald Coast

    Thanks DREAM ON for your comment. I am glad I was able to help you. Thanks for stopping by my hubs.

  • profile image

    Elizabeth Jernigan 6 years ago

    Wow thanks for the tips.

  • Rhonda Waits profile image
    Author

    Rhonda Musch 6 years ago from The Emerald Coast

    Thank you Elizabeth for your comment. I am glad you liked it.

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    Gail Minor 6 years ago

    Thank you when I realized my company I wanted to invest with, wasn't registered with the sec I didn't put up my money. I later found out they were frauds. Thank you

  • Rhonda Waits profile image
    Author

    Rhonda Musch 6 years ago from The Emerald Coast

    Thank you Gail for your comment. I am glad you did not lose your money. Always do your home work when it comes to Private Placements.

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