What is a private placement?
A “private placement” is the non-public offering of securities to a limited number of investors. Securities regulations exempt private placements from public registration with the SEC, but they must still be cleared with the SEC. The most common private placements involve closely held private corporations (private corporations with relatively few shareholders). It is estimated that private placements fund 75% of the new businesses formed in the United States.
A private placement is an equity offering that allows accredited investors to buy a stake in a rapidly growing and innovative company before it sells its shares to the public in a registered initial public offering (IPO), merges, or is bought out. Private placements present an attractive investment opportunity as they can result in much higher returns than a traditional stock purchase or an IPO.
