FIN 332 Lecture Notes - Lecture 3: Seasoned Equity Offering, Privately Held Company, Private Placement
Document Summary
Firms raise capital: borrowing money, selling shares in the firm. Investment bankers are hired to sell them in the primary market. Trade in existing securities takes place in secondary market. Sell firms directly to rich people in a private placement. Not very liquid because it is a small number of investors. Ipo- first offering of shares to the general public. Seasoned equity offering- sale of additional shares in firms already publicly traded. Must register prelim w sec final approval is called the prospectus. Announces the price at which the securities will be offered to public. Private corporations- shares held by small number of managers and investors. Privately held company- owned by relatively small # of shareholders. Have fewer obligations to release financial statements to the public. Shelf registration- allows firm to register securities and gradually sell them for 2 years after ipo. Investment bankers go on road shows to market the offering to the public.
