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  • Selling Company Shares to Raise Business Capital... Is it Possible? 0 comments
    Nov 23, 2011 9:34 AM | about stocks: PPM

    Business working capital may be what you need, but getting it might not be so easy. Most companies will consider a small business loan, before considering giving up ownership in anyway.  However taking on investors has advatages as well, unfortunately selling stock to the public, is not always a financing option available to most small businesses. There is a way to sell stock in a private placement as a way of raising capital from qualified investors who become shareholders in your business.

    There are considerations:

    You need to prove growth and profitability. Business planning with financial projections and a solid and realistic marketing strategy is essential.  Shareholders want a clear picture of your company’s future and an accurate account of how their money will be put to use.

    Unlike typical SEC registration requirements, a private placement offering does not need to be registered with the Securities and Exchange Commission. However, the placement must adhere to specific laws and requirements (state and federal).

    You will be required to provide a Private Placement Memorandum (PPM). This document discloses very specific information about the company, including rights and obligations. The PPM should be established with the help of an attorney with a good level of Private Placement experience and specific knowledge of state laws.

    Selling securities is a good way of raising business capital but also comes at a price. Remember that opening your businesses up to potential shareholders means a greater responsibility as well as sharing in the decision making of your company.

    Stocks: PPM
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