Series 82: Types Of Private Placements

Types of Private Placements

Private placements can be structured in two different ways: as equity offerings or as debt offerings.

An equity offering is when a company raises money by selling part of its ownership through either shares (for C-corps) or membership units (for LLCs). Newer companies are more likely to choose equity offerings because they are not required to make regular interest payments. Instead, investors profit as the company profits.

A debt offering is when a company raises money by issuing some form of debt instrument, such as bonds. In this case, the company borrows money from investors, promising