ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos

Finance: What is private placement? 5 Views


Share It!


Description:

What is private placement? Under Regulation D of the Act of 1933, securities can be sold to qualified private and institutional investors via private placement, meaning not open to the general public at large. Instead of an IPO, they are sold via a Private Placement Memorandum and subscription agreement. These securities can be for equity or debt and will usually be unregistered for a holding period time and bear a 144A legend until the holding period has expired.

Language:
English Language

Transcript

00:00

finance a la shmoop what is a private placement okay a placement means that a [Man discussing private placement]

00:08

company is placing its shares with some new owner in return for cash that is

00:14

it is placing ownership in return for capital so what's the most famous type

00:19

of public placement all right come on spell it come on with me now yes IPO so

00:24

if that's a public placement it's private kiss and cousin private [People in a car cuddling]

00:29

placement is almost the same thing all be it with fewer rules about disclosure

00:33

and structure and a bunch of other regulatory stuff in fact a private

00:37

placement is also called a regulation D placement...Such that

00:43

securities are not registered with the state or the SEC the way they would be

00:47

in a public offering in a public offering securities can be sold to [Group of people in public securities]

00:51

pretty much anyone who has the dough to buy the shares and is qualified...

00:58

....No restrictions or requirements

01:02

because the government's done all the filtering but in a private offering the

01:06

Securities can only be sold to what is called accredited investors that is

01:11

investors sign a piece of paper that warrants and represents that they're [Wealth verification document signed]

01:15

wealthy enough to lose all the money they're putting into this investment

01:18

like they have over a million bucks in assets and a few hundred grand a year or

01:22

more and education and all that and that they're smart enough to have known not

01:26

to do this investment in the first place should things go awry think no training [Boy riding a bike]

01:31

wheels, no railing, no ambulances or cops or firemen you're on your own here in a

01:36

private placement there baby and yeah good luck [Man sitting by a bus stop and bus arrives]

Up Next

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Related Videos

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...