Private Placement in the United States

A “private placement” is a sale of securities that does not require registration with the relevant government agency (e.g, the Securities and Exchange Commission in the U.S.). Private placements can be made by private or public companies. Buyers are usually institutional investors. U.S. private placements usually fall into one of the exceptions in Regulation D to avoid the registration requirment provided by the Securities Act of 1933, as discussed below.

Legal Materials

News about private placements is reported in The Daily Deal Pipeline and IDD’s Private Placement Letter, available in print and on Lexis.

Data on private placements is available in databases from PrivateRaise.com, Capital IQ and Thomson Financial. If you aren’t a regular user, PrivateRaise.com lets you sign up for just one month. For Thomson Financial, you can call their Demand Center (800-638-8241), and they will create a custom spreadsheet for you.

The Placement Tracker database provides data exclusively for private placements issued by public companies, known as PIPES (“Private Investments in Public Entities”). PrivateRaise.com covers pipes too.

Selected Private Placement Offering Memorandums are available from Perfect Information, RealDealDocs, Lexis Securities Mosaic, Intelligize and in the “International Prospectuses and 144A” database on LIVEDGAR. You can also try searching with Google or any other good search engine.

Alerts: Capital IQ allows you to set up alerts for M&A events either at a particular company or that satisfy specific criteria.

League Tables PrivateRaise.com publishes private equity league tables. The Deal and PlacementTracker do League Tables for PIPES.

Treatises discussing private placements include Exempt and Hybrid Securities Offerings (PLI) and Private Placements and Other Financing Alternatives (part of PLI’s Corporate Law and Practice Handbook series). Of possible interest: Private Equity Funds: Business Structure and Operations (Law Journal Press), The Issuer’s Guide to PIPEs (Wiley) and PIPEs: A Guide to Private Investments in Public Equity (Wiley).

The SEC’s Regulation D provides exceptions to the securities registration requirements of the Securities Act. The exceptions make it easier and cheaper for companies to raise money by selling securities. Private placements made under a Regulation D exception are reported on Form D. For more information see Filing and Amending a Form D Notice: A Compliance Guide for Small Entities and Others, Limited Offering Exemptions, Regulation D by J. William Hicks (West) and the relevant sections of Exempt and Hybrid Securities Offerings (PLI).

Term sheets: See the “Term sheets” section of the Venture Capital entry in this legal Encyclopedia.

See Also

Initial Public Offerings
Private Equity and Venture Capital
Securities and Exchange Commission
Securities Laws