LOS ANGELES, Aug. 6, 2018 /PRNewswire/ -- A private placement agent assists market participants with the identification and vetting of non-registered or exempt securities, and coordinates the purchase and sale of those securities. These firms can also assist in the preparation and distribution of marketing materials, offering documents and financial statements as well as the collection of investment proceeds and other functions typically performed by an internal Investor Relations professional.
Using a placement agent has many benefits:
- Reduces time burdens on a fund manager, corporate issuer or investment allocator who may then focus on other important business operations
- Expands the issuer's network of potential investors
- Uncovers hard-to-find investment opportunities
- Produces value-add relationships that carry over to future deals
- Clarifies and refines the issuer's goals, methods and timelines
There are a few challenges for issuers to consider before using a placement agent:
- No guarantee of success. The total amount raised depends on the desirability of the investment product, the sponsor's experience and expertise, the then current economic cycle and an investor's particular needs and limitations.
- Fundraisings take time. Issuers should allow at least 6-24 months and perhaps more to complete a raise and be willing to adjust that range given market dynamics and the specifics of the deal.
- Work with licensed professionals. Using a non-licensed broker exposes the issuer, investors and the securities offering to significant regulatory and contractual risks.
- Disclosure obligations. Depending on the laws applicable to your business, you may be required to submit disclosure to regulators, investors and/or the public regarding your use of a solicitor. Those disclosure obligations may be ongoing.
Investors must always be "Accredited" in a private offering; most placement agents tend to work with family offices, foundations, endowments and ultra-high-net-worth individuals.
It's important to remember that these alternative investments rely on specific exemptions from Federal and State securities laws and therefore are available only to those investors who meet a product's stated eligibility requirements.
Also, no two fundraises are the same. Therefore, the particular investor will often depend on many factors such as the type of investment product, the minimum required investment, the holding period (if any) for the investment, applicable tax and/or residency considerations, as well as the investor's own internal requirements or restrictions.
Jamil French provides capital introduction and financial advisory services on the RainMaker Securities platform. He has been a Wall Street corporate lawyer to hedge and private equity fund sponsors, blue chip companies, investment banks, lending and other institutions. He received an A.B., cum laude, from Princeton University and a J.D. from Harvard Law School where he served as a submissions editor for the Harvard International Law Journal. Institutional Investor Magazine named French a 2018 Hedge Fund "Rising Star". He is Chairman of the Hedge Fund Association's Strategic Investor Committee where he educates the hedge fund community about the benefits and challenges of emerging fund managers. French holds Series 7 and 63 securities licenses and is admitted to practice law in New York and before the United States Supreme Court. Jamil French can be reached at [email protected] and at 888.333.1091 x753.
RainMaker Securities, LLC (www.rainmakersecurities.com) member FINRA and SIPC, is a placement agent and merchant banking firm that serves as broker-of-record for the sales transactions between private issuers and the investors. RainMaker is a recognized leader at providing unique and proprietary private equity and debt products to its alternatives investors. In addition to fund products comprising unique private asset classes, they create markets in the shares of a wide variety of late-stage high growth private corporate issuers. RainMaker provides diligence over all clients and investors, compliance and administrative oversight for my business and acts as a sounding board for my clients based on their deep understanding of private markets and alternative investment products. RainMaker's clients are uniquely positioned to benefit from the firm's deep investor networks, potential deal collaboration with 50 seasoned representatives, more efficient due diligence and onboarding, streamlined agreements, and fast turnaround times.
Rainmaker Securities, LLC – a registered broker dealer, Member FINRA/SIPC, 11390 West Olympic Blvd., Suite 380 Los Angeles, California 90064. This document does not represent an offer to sell or a solicitation of an offer to buy any security.
SOURCE Rainmaker Securities, LLC