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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
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
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- Spring '12