CAOT 31 Lecture Notes - Lecture 16: Liquidity Risk, Financial Statement, Private Placement
30 Oct 2020
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Investment bankers generally hired to manage sale of newly issued securities in primary market. Trades in existing securities take place in the secondary market. Privately held companies is owned by a relatively small number of shareholders fewer obligations to release financial statements. May have only up to 499 shareholders. When private firms wish to raise funds, sell shares directly to a small number of institutional or wealthy investors in a private placement. Publicly traded companies first issue of shares to general public ipo: initial public offering seasoned equity offering: sale of additional shares in firms that are already publicly traded investment bankers = underwriters. Prospectus: a description of the firm and the security it is issuing needs approval of sec. Initial public offerings: prospectus, road shows travel around the country to publicize imminent offering. Generate interest and provide information about the price: book: indications of interest book-building: polling potential investors, ipo.
