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For start up firms and firms in financial trouble the

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Unformatted text preview: t-up firms and firms in financial trouble, the public equity market is often not available. Managerial Finance 3 Private Placements Avoid the costly procedures associated with the registration requirements that are a part of public issues. The SEC restricts private placement issues ot no more than a couple of dozen knowledgeable investors including institutions such as insurance companies and pension funds. The biggest drawback is that the securities cannot be easily resold. Managerial Finance 4 Venture Capital The limited partnership is the dominant form of intermediation in this market. There are four types of suppliers of venture capital: 1. Old-line wealthy families. 2. Private partnerships and corporations. 3. Large industrial or financial corporations have established venture-capital subsidiaries. 4. Individuals, typically with incomes in excess of $100,000 and newt worth over $1,000,000. Often these “angels” have substantial business experience and are able to tolerate high risks. Manage...
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