A private placement

A private placement is a sale of stock shares or bonds to pre-selected investors

and institutions rather than on the open market[ CITATION Akh20 \l 1033 ]. Private
placements continue to be issued in the municipal debt market and remain a
topic of interest for municipalities, investors, and regulators. Private placements
are often sold without an underwriter to relatively sophisticated investors and are
typically “buy‐to‐hold” transactions[ CITATION Tim19 \l 1033 ]. A private placement is a
securities issue sold directly to a small group of professional or institutional
investors. A private placement is sold to professional investors and not publicly
advertised, market regulators in many countries have been adopted more flexible
disclosure requirements and selling rules. Since Eurobonds are offered for sale as
private placements, they avoid much of the costly regulatory requirements
associated with public offerings[ CITATION msa \l 1033 ].

The three most important features that would classify a securities issue as a
private placement are:

1. The securities are not publicly offered

2. The securities are not required to be registered with the SEC
3. The investors are limited in number and must be “accredited”

Companies, both public and private, issue in the private placement market for a
variety of reasons, including a desire to access long-term, fixed-rate capital,
diversify financing sources, additional financing capacity beyond existing investors
(banks, private equity, etc.) or, in the case of privately held businesses, to
maintain confidentiality.

Since private placements are offered only to a limited pool of accredited

investors, they are exempt from registering with the Securities and Exchange
Commission (SEC). This affords the issuer the opportunity to avoid certain costs
associated with a public offering as well as allows for more flexibility regarding
structure and terms[ CITATION eco \l 1033 ].  
Evaluation of the placements

It is important to acknowledge that different private placements are likely to be

motivated by different considerations. Some corporate control and corporate
finance events may be relatively homogeneous, but private placements of
common stock are not among them. Consequently, there are likely to be factors
that we have not controlled for. There are also likely to be selection biases on the
type of firms that issue private placements. Both factors raise issues of
Endogeneity[ CITATION Mic \l 1033 ] . 

Bibliography
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Ganti, A. (2020, march 4). Retrieved from Investopedia: www.Investopedia.com

Michael J.Barclaya, C. G. (n.d.). Retrieved from science direct: https://www.sciencedirect.com/

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Tima T. Moldogaziev, R. A. (2019, august 23). Retrieved from Wiley Online Library:
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