What factors could lead an institutional investor to prefer

Reference no: EM13910133

The bubble in stock prices that occurred in the late 1990s led to a hot issue market in which the market was attracted to deals that offered the promise of spectacular returns. This "irrational exuberance", a phrase coined by Alan Greenspan, caused some companies to choose the private placement market to raise capital rather than attempting sales in follow on public offerings. The private placement market offers potential advantages in structuring of new deals to allow follow on financing or offerings that contain embedded options that may be more difficult to market in the public market. An article written in January 2000 entitled, "Out of the Public Eye," describes developments that took place in this market.

After reading this article, answer the following questions:

1. What factors could lead an institutional investor to prefer acquiring an equity stake in a public company through a private sale rather than purchasing such stock in the public market?

2. Many of the placements are done in the form of convertible preferred stock. What are some of the potential advantages offered by convertible preferred offerings?

Reference no: EM13910133

Questions Cloud

Find the molecular formula : a) Find the molecular formula of this compound if the Formula mass is 62.12 g/mole. b) Determine how many H atoms would be in a 3.50g sample of this compound.

Difference between an equation and an expression : What is the difference between an equation and an expression? Can we multiply every term of an equation by anything we want? How about an expression?How do you find the common denominator of two or more fractions

Pollutant turned the painting black : Lead pigments were used in water colour painting which turned black after prolonged to an air pollutant the original color was restored by using H2O2 which pollutant turned the painting black?

Construct a spreadsheet model to compute free cash flow : What level of annual unit sales does it take for the investment to achieve a zero NPV? Use your spreadsheet model to answer this question

What factors could lead an institutional investor to prefer : What factors could lead an institutional investor to prefer acquiring an equity stake in a public company through a private sale rather than purchasing such stock in the public market?

Draw an indifference map for each consumer : Describe the set of bundles that Mr. Creosote can afford. Draw a few indifference curves and the budget line. How many muffins of each type will he buy?

Determining the volume of the rock : A student finds a rock on the way to school. In the laboratory he determines that the volume of the rock is 29.7 cm3, and the mass in 139.943 g. What is the density of the rock?

Environment at the coffee bean : 1.How would you gauge Peter's achievements orientation?What are some of the needs not being met for Peter Gibbons at Initech?What changes might improve Peter's motivation? 3.What about the environment at The Coffee Bean? Pygmalion or Golem?

Substance and chemical properties of the substance : Is there any way to reduce the viscosity of water by adding any substance ,as polymer based viscosity reducing agents are used to reduce the viscosity of crude oil ? If so, what substance and chemical properties of the substance?

User Account

All Pages