A private placement is a method of raising capital for a company by selling stock shares or bonds directly to a pre-selected group of investors and institutions, rather than publicly on the open market. Here are some key points about private placements:
- Private Placements are less regulated compared to the sale of securities in public markets
- Private Placements require less disclosure to potential investors as compared to public offerings.
- Participation by multiple types of investors such as, Pension funds, mutual funds, accredited and non-accredited investors, depending on the registration exemption chosen.
- Capital can be raised more quickly compared to public offerings, when using Private Placements.
- Flexibility and efficiency can make Private Placements a good choice for startups and companies seeking targeted investment opportunities.
Why Hire a Private Placement Attorney?
1- Expertise in Securities Law Protects You and Investors
It is vital to understand the intricate nature of securities law and the potential consequences of non-compliance. A private placement attorney has specialized knowledge that protects both companies and investors by ensuring your private placement offerings adheres to all legal requirements.
2- Increased Efficiency Saves Time and Resources
See out a Private Placement Attorney with many years of experience. This can streamline the private placement process by anticipating potential roadblocks and navigating them swiftly. As a result, this saves your company valuable time and resources. There is no replacement for experience in drafting the important documents needed to compliantly raise capital.
3- Risk Mitigation: Safeguarding Your Company and Investors
A private placement attorney plays a crucial role in risk mitigation during the process of private placements. Private Placements involve many complex legal requirements. Having an attorney who understands securities laws and anti-fraud regulations, will protect you and your investors. If there are ever disputes regarding your offering, experienced securities attorneys can mediate and resolve these conflicts. When it comes to drafting Private Placement Memorandums Minimizing risk is a focus of an experienced attorney.
4- Deal Structuring and Negotiation: Balancing Needs
Your attorney’s role in negotiating the terms of the investment with potential investors, can give you much needed credibility with those you are seeking to raise capital from. An attorney with a track record of structuring successful offerings that meet the needs of both parties, ensures a fair and balanced agreement.
5- Ongoing Guidance and Support: Addressing Unforeseen Challenges
Typically when an issuer is working with an experienced attorney, there won’t be any unforeseen challenges. A seasoned Private Placement Attorney provides ongoing guidance and support throughout the entire process. Should unforeseen questions or challenges arise, it will be vital to have legal support readily available.
What Does a Private Placement Attorney Do?
Drafting and Reviewing Key Documents: Ensuring Accuracy and Transparency
Sometimes things do not go as expected when raising private capital. There can be economic events, newsworthy events, unforeseen supply and demand events. When this happens, investors may become unhappy with the results they were told that they would be getting from their investment. This is where the rold of your attorney of choice will be looked upon as a great decision or a poor one.
The role of an experienced attorney in drafting and meticulously reviewing all crucial documents, particularly the Private Placement Memorandum (PPM), can protect the issuer, should the need arise. As long as the drafting of the documents was done accurately, transparently, and compliantly, with attention to all of the legal requirements, the issuer should be protected.
Securities Law Compliance: Navigating Regulations
As stated in the previous section, a private placement attorney possesses a deep understanding of the complex regulations governing private placements. They leverage their knowledge to navigate these regulations and ensure your offering adheres to all relevant laws. Undertaking a raise of private capital without the use of a securities attorney, would not be a wise option to explore.
Conclusion
Spend time finding an attorney with experience and expertise that aligns with your specific needs. Many issuers put the cost of the PPM and the services of the attorney at the top of their list. That shows a gross misunderstanding of consequences that can result from inexperienced counsel or mass marketing of PPMs and legal advice. Some issuers will choose companies that sell template PPMs, while others will attempt to create their own. It’s important not to confuse cost with value, as using other people’s money is not something we would recommend you nonchalantly go about doing.
Consult with a qualified private placement attorney for all capital-raising endeavors.
Considering a Private Placement Attorney?
If you’re considering raising capital through a private placement, Centarus can help. We have a team of experienced private placement attorneys who can guide you through every step of the process. All of our attorneys have extensive experience in securities drafting for both private and public offerings.
Twenty five percent of our business is regulatory defense. Our firm represents the clients of other law firms in cases before the SEC and individual state authorities. The value to our clients is that we see mistakes made by other lawyers. We see non-compliant offerings where drafting mistakes cost issuers vast sums of money. This experience benefits our client’s in ways we can explain to you if you set up a consultation.
Contact us today!