Private placement: a new option for the middle market

Article Abstract:

Traditionally, private placements have been used by large corporations as a financing alternative to bank loans, and have been invested in by large insurance companies (such as The Hartford, Aetna, Fireman's Fund, and Travelers). Most such private placements were also handled by large New York investment bankers. Amounts involved often exceeded $30 million per total placement. However, mid-sized closely held corporations are beginning to offer private placements for lesser amounts ($15 to $20 million) through regional bankers to mid-sized insurance corporations (such as Phoenix Mutual Life of Hartford or Northwestern National Life of Minneapolis). One of these middle market private placements is described: the offer of $20 million in stock by Dataserv Inc., placed by Rodman and Renshaw Inc. For closely held corporations and other mid-sized companies interested in private placements, a $5 million placement of stock will not be as cost-effective as a $20 million placement, but a $5 million private placement is still more effective than negotiating a $5 million revolving line of credit.

Analysis, Marketing, Securities, Close corporations, Closely held corporations, Private placements (Securities), Buy-sell agreements

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Higher interest rates on taxable IDBs entice investors

Article Abstract:

Taxable industrial development bonds (IDBs) offer firms with as little as $2 million in annual sales a new method for raising $500,000 to $7 million in investment capital. IDBs are issued with the aid of local government bodies, in return for which the company agrees to employ a certain number of citizens within the local government's jurisdiction. The advantages to this form of corporate finance are discussed in detail; basically, the taxable IDB is substantially similar to the tax-exempt IDB, except that the taxable IDB receives governmental approval more readily since it does not involve tax monies in its offering. Two Washington, D.C.-based organizations, the National Association of State Development Agencies and Developing Systems Ltd., are working with local governments to help them structure issues of taxable IDBs.

Usage, Economic aspects, Bonds, Bonds (Securities), Industrial development bonds

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