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Private Placement: What is a private​ placement? What are the comparative pros and cons of private...

Private Placement: What is a private​ placement? What are the comparative pros and cons of private placement versus a pubic​ issue?

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Answer #1

Private placement means selling of the stock directly to the private investor instead of a public issue.
It is offered by a private offering.

Pros:
1. It is a cheap source of capital than a public offering.
2. The time taken for issue of shares is significantly less.
3. Statutory compliance is less.

Cons:
1. It provides significant control to a small group of investors, who can influence the companies policies and decision.
2. Generally, It takes millions to even apply for a private placement.

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