Private placement financing is another unique method for a business to obtain capital, and provide cash infusions at the same time to be used to increase sales, or to cover the cost of new equipment or software.
As with other sources of financing, private placement has to be done properly to ensure your business get the most benefit possible. Private placement is a perfect source of financing for companies which are growing.
Private placement is the investment of money from private investors who granted shares in the company. Through the purchasing of stocks or bonds a company will obtain the capital they need to continue expanding.
With a private placement the company selling their stocks and bonds most of the time does not have to register with the Securities Exchange Commission.
This reduces the amount of extra work involved, or needed. It is the most popular form of Regulation D non-public investing. Another benefit is that private placement is cheaper most of the time than actually taking a company public.
Other benefits of private placement include:
• Flexible financing needs for companies of all sizes including capital from 100 thousand up to the millions.
• Investors don’t look for quick profits and high returns on their investments. They are ok with a return of 10 to 20%.
• Capital can be raised much faster.
• The cost of obtaining the capital is quite a bit less.
An established company in the third stage of financing is the best candidate for private placement financing.