Private Placement

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What is a 'Private Placement'

A private placement is the sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market.

BREAKING DOWN 'Private Placement'

Since a private placement is offered to a few, select individuals, the placement does not have to be registered with the Securities and Exchange Commission. In many cases, detailed financial information is not disclosed and a the need for a prospectus is waived. Finally, since the placements are private rather than public, the average investor is only made aware of the placement after it has occurred.

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RELATED FAQS
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    Understand what it means when a company does a private placement, and learn how this typically impacts the share price of ... Read Answer >>
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    Learn about purchasing securities through a private placement investment, and understand the risk factors associated with ... Read Answer >>
  3. What are some advantages of raising capital through private placement?

    Understand how a business can raise capital through private placement and the benefits business owners receive through this ... Read Answer >>
  4. What is the difference between an IPO and a private placement?

    Learn the differences between private placements and initial public offerings that companies use to raise capital through ... Read Answer >>
  5. What is required to become an accredited investor in a private placement?

    Learn how the SEC defines accredited investors, and understand exceptions to the requirements for an accredited investor ... Read Answer >>
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