Difference between Public Offering and Private Placement

Fixed asset turnover ratio

Difference between Public offering and Private Placement 

Methods of Issuing Securities

Public Offering is one of the methods of selling securities to the general public where there are a large number of investors. Private Placement is one of the methods of selling securities directly or privately to a few/a group of individual investors or institutional investors.

 

Difference between Public offering and Private Placement are as follows:

S.No.

Public Offering

Private Placement

1. Public Offering is one of the methods of selling securities to the general public where there are a large number of investors. Private Placement is one of the methods of selling securities directly or privately to a few/a group of individual investors or institutional investors.
2. Generally, large scale company raises fund through public offering. Generally,small scale company raises fund through private placement.
3. In case of public offering,investment banker acts as a middleman which hiring together suppliers and users of long term fund in capital market. In case of private placement,there is no middleman as it is the direct negotiation between issuing company and the investors.
4. Under public offering, floatation cost is included as there is the need of underwriter. Under private placement, floatation cost is excluded as there is no need of underwriter.

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Author: Smirti

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