Private placement

A private placement means the circulation of securities in a closed circle.

Sooner or later, every continuously growing business comes to the point where it finds that what is available is scarce credit sources. Then the possibility may arise that the liabilities needed to finance its growth can be obtained from the capital market get it. Exiting the capital market can be done by a loan or a security that results in the involvement of capital-type resource (for example bond obsession share) you are private with its public offering. 

In case of private placement a issuer in a predetermined circle, usually a small number institutional investor is offered for purchase by securities. An example is when a company sells its bonds to pension funds. Even then, the issuer needs the cooperation of a financial intermediary, which is most often a bank. This institution takes care of the organizational, management and information provision tasks related to the issue.

In the case of private offering, investors are also informed, an important part of which is the securities to be issued, as well as the issuer 's financial, economic and legal data, your business plan presentation. However, the range of information made available to investors is significantly narrower and less regulated than in the case of a public offering. It is the responsibility of the issuer and the distributor to ensure that all investors have equal access to relevant information.

Overall, a private placement is usually a simpler, less expensive process than a IPO. In addition, by definition, the range of available investors and the amount of resource that can be raised are more limited, and the issued papers are less tradable later on (i.e., it is more difficult for investors to sell them).