2.8. Offering Structures

Public. A public offering is an offering of securities to the investing public. Public offerings must be registered with the SEC, and publicly held companies are subject to disclosure requirements. Public offerings are typically underwritten by one or more investment banks, and once issued, the securities may generally be freely traded. Chapters 6–9 discuss the public offering process in detail. The various types of public offerings are discussed later.

Private. A private offering, also called a private placement, is a placement of securities with a discrete set of investors, typically institutional investors. Private placements are generally smaller than public offerings. They often employ a private placement agent, or simply a placement agent, in a role similar to that of an underwriter. As long as they meet certain requirements, private placements are exempt from registration with the SEC. Securities issued in a private placement typically come with restrictions on transfer. Private placements are discussed in Chapter 10.

Private investment in public equity (PIPE) transaction. Also called a PIPE offering or just a PIPE, this is a private placement conducted by a company that is already publicly traded. In a typical PIPE transaction, one or more institutional investors buy the issuer’s stock in a private placement, at a discount from the market price. Normally, stocks sold in a private placement cannot immediately be resold on the open market, making them illiquid investments. However, as part of the PIPE agreement, the iss