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Private Placement
Private Placement
A Private Placement is private investment capital invested in a company, usually from individual investors in the form of stock and sometimes bonds. In the United States, Private Placements do not need to be registered with the Securities Exchange Commission. Regulation D and Rule 4(2) of the Securities Act of 1933 are the most popular forms of non-public private placements. The process can also be referred to as a Private Stock Offering as well.
More than $400 billion in capital was raised in the Private Placement market during 2002. The majority of that equity came from pension funds, investment pools, banks and insurance companies. In total, there were just over 2,000 completed offerings. However, Private Placements do not simply favour small businesses. Larger corporations can reap the benefits as well because Private Placements are far less expensive and time consuming than public offerings. Because there are so many options for undertaking corporate financing it is essential that corporate officers carefully review their entire financial picture before embarking on a capital raise or a stock offering of any kind. In a brief overview though, Private Placements offer a viable form of business financing without the constraints of taking a company public and conceding control.
