Q: Why Do You Need a Private Placement Securities Lawyer? A: To Assess Your Risk
Private placement offerings are a type of private, non-public offering in which a company sells a limited number of its equity (usually in the form of stock or preferred shares) to a select group of private investors.
Basically, private placement offerings have a similar effect as a mini-initial public offering, because it spreads the stock of the company to many individuals, but the company stays private. A private placement offering is different from an initial public offering because only certain parties are invited to invest, as opposed to the general public.
Private placement offerings have several advantages.
First, private placement offerings are often issued as a means of securing capital quickly for the issuing company. Select investors — such as accredited investors, large banks, mutual funds, insurance companies, and pension funds — are invited to purchase shares at a certain price prior to any public offerings for a limited period of time. Once that date passes, the investors lose out on their chance to take advantage of the private placement offering which might shut them out until after the company goes public through an initial public offering.
Secondly, private placement offerings can also help keep the price of shares from plummeting soon after an initial public offering. Investors who are invited to participate in private placement offerings often need to hold on to their shares for a certain amount of time after the company initiates a public offering, which will prevent the shares’ price from crashing down and from the market being flooded with shares.
Thirdly, they’re often much cheaper than IPOs. We can prepare your private placement memorandum for as low as $15,000 under the right circumstances.
The shares sold on these types of offerings can be registered, but do not have to be registered with the Securities and Exchange Commission. There are many state and federal regulations that will need to be complied with. Before a company even structures an offer of this type, the business needs to speak with legal professionals to make sure that they are aware of the current laws, and that the company’s executives are not in violation of any regulations. Without this due diligence, a private placement offering could open up a company to tremendous legal risk at a critical juncture. Our team of highly skilled securities lawyers can help shepherd you through this complex process and avoid any hidden obstacles.
The Bradshaw Law Group will provide the kind of experienced private placement securities lawyer NYC companies need to proceed with peace of mind. People literally go to prison when they don’t comply with securities laws.
To learn more about these types of offerings, contact us anytime for a consultation with our team of private placement securities lawyers.