April 5, 2015

Preferred Equity as a Substitute for a Debt Offering

A company seeking to raise capital through a private placement generally looks to either debt or equity.  Each has its respective advantages and disadvantages, both to the company and to the investor.   An equity investment presents the investors with the possibility of a larger upside participation, but does not does not require the repayment of  capital. 

April 5, 2015

The Most Common Exemption–Regulation D Rule 506

Regulation D contains safe harbors that provide exemptions from federal registration. These include exemptions under Rules 504, Rule 505, and Rule 506. Rule 506 is the most commonly relied upon exemption in private offerings (accounting for more than 90% of offerings, according to SEC statistics).

April 5, 2015

How to Avoid Liability in a Private Placement

Improper drafting of PPM disclosures often results in significant liability, even when the issuer did not overtly intend to deceive investors. The SEC and state securities commissions have developed a complex system of disclosure regulations, with which a company must comply for the securities to be deemed properly sold. 

April 5, 2015

Structuring a Private Placement Offering

A private placement offering’s basic structure involves either debt, equity, or some combination of debt and equity. Within the basic structure, an issuer has numerous options, from convertible securities (debts that convert to equity upon certain events), to priority distributions and resumptions. Not one structure fits every issuer.

April 5, 2015

What’s in a Private Placement Memorandum

A Private Placement Memorandum (“PPM”), also known as a private offering document and confidential offering memorandum, is a securities disclosure document used in a private offering of securities by a company or investment fund. 

January 15, 2014

Form D Filing

Form D is a federal notice of an exempt securities offering and is the only disclosure document that is required to be filed with the SEC. This document discloses biographical information about the offering, the company, use of proceeds, and the principals of the company.

September 30, 2013

Who Will Verify Accreditation Under Rule 506(c)?

The SEC’s adoption of Rule 506(c) to allow general advertising and solicitation for private placement offerings has left us with some questions of practicality. We know from Rule 506(c) that issuers must take “reasonable steps” to verify the accreditation status of investors.

August 15, 2013

SEC Adopts JOBS Act Lifting Ban on Advertising for Private Placements

On July 10 the SEC adopted the long-awaited final rules to implement sections of the JOBS Act to lift the ban on general advertising and solicitation for certain Regulation D private placement offerings (as well as 144 offerings).  At the same time, the SEC proposed new rules that, if adopted, will require additional regulatory burdens.