What are 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.