The practice of raising funds in exchange of company shares. Aside from obtaining additional capital, private placements can also have a goal of adding, with minimal regulatory constraints, new select private investors. The investors participating in a private placement usually are institutions and accredited investors. Despite being privately held, private placements function like stock offerings. As a new generation of shares is being issued, existing stockholders will eventually get diluted and result in lower price per share.
Continue Reading Demystifying Private Investing: Publication #2: Private Equity Terms