Читать книгу Investment Banking For Dummies - Matthew Krantz - Страница 49

IPOs may get all the attention. Splashy sales of stock to the public, such as ride-sharing company Uber Technologies in May 2019, grab headlines and investors sometimes line up to buy shares.

But sometimes companies raise money in more subtle and private ways. One example of a way investment banking pairs up companies and investors, away from the prying eyes of the public, is with a private placement. In a private placement, a company can sell stock directly to investors even if there’s no public offering or shares listed on an exchange (a regulated marketplace for securities to be bought or sold). Companies may use private placements because they offer a few advantages:

 Lighter regulation: IPOs are heavily monitored by regulators. Every risk the company faces must be disclosed along with audited financials, meaning the books have to be studied by an accounting firm. But because private placements are not offered to the public, the securities don’t have to be registered with the Securities and Exchange Commission (SEC). This means the company and investment banks don’t have to jump through all the hoops to get the sale done.

 Limited to sophisticated investors: Private placements can’t be offered to the general public. Instead, they must be extended only to accredited investors (typically, professional investors like mutual funds or high-net-worth individuals). These investors are the ones who are supposed to know how to research risky investments, or have the wherewithal and understanding to take losses.

 Lower costs: Because a private placement doesn’t require as much regulatory oversight, the costs of putting out the offering tend to be lower. Fewer lawyers are needed because there are fewer documents to create. And there’s less cost associated with investment banking, because private sales tend to be smaller and don’t require the lining up of a massive group of investors to get the deal done.

Private placements may seem like a dream come true for companies. After all, who wouldn’t like having fewer regulators breathing down his neck? But private placements come with their drawbacks, too. Because these offerings aren’t made to as many investors, companies tend to get lower price tags on their stock than they would if they sold shares to the public. Academic studies show that companies that sell stock in private placements tend to be valued about 30 percent lower than public companies. There’s also a limit to the number of private shareholders a company can have (500) before it must register with the SEC. After a company accumulates more than 500 private investors, which includes employees who get shares of the company, it must file with the SEC. Triggering this rule was a big reason Google (now called Alphabet) conducted an IPO when it did, in 2004.