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Private Equity

VIEWS: 21 PAGES: 39

									You’ve got
big plans.
Growth.
Vision.
Disruptive
Technology.
  Wind
Resource.
Today, we are
talking about:



             Private
   Equity.
Equity.
Shares.
Debt.

Stock.
Convertible Debt.
       Partnership Interests.
 Options.
Equity.
A “slice” of the
ownership of the
business.
This is regulated.
Heavily regulated.
   Right now,
Canada has 13
 jurisdictions
   regulating
   securities
 transactions.
 Here is the
basic rule:
If you are selling
     securities,
  you must file a
    prospectus.
You
must
file a
prospectus.
…unless you qualify for a

  prospectus
  exemption.
Preparing and filing a
prospectus is costly
and it takes time.
so, there are the
prospectus exemptions

a.k.a.:
–the “Private
Placement
Exemptions”.
    Private equity is generally thought of as medium to long-
                                     term finance provided to
                          potentially high growth companies.




From a regulatory perspective, it refers to the fact that
the issuance of securities (debt, or equity) was not
accompanied by a prospectus filing.
a
prospectus-exempt
private placement
can be a good
way to raise
early to mid-stage
development capital.
Some companies do private
placements 5 to 10 times
before becoming a public
company, being sold or
becoming self-funding
through operating revenue.
So, what
are the
“Private
Placement
Exemptions”?
Most Common:
The “Private Issuer Exemption”:

    -   no more than 50
        shareholders

    -   restrictions on the
        transfer of shares
This is how most start-ups and
most “Mom & Pop” corporations are
financed.
Also Popular:
The “Accredited Investor Exemption”:

Securities can be sold to individuals with:

       (i)     over $1,000,000 in financial assets;

       (ii)    over $200,000 annual income (or $300,000
               with spouse);

       (iii)   over $5,000,000 in assets;

…and to certain investment funds, financial institutions and
corporations.
          This is how most
professionally underwritten
        securities offerings
             are exempted.
Also used:
the “Family, Friends and Business
Associates Exemption”
Allows for a distribution of securities to certain persons who
are “close” to the issuer.


the
“Minimum Investment Exemption”:
Allows for exempt purchases of securities at
an acquisition cost of not less than $150,000
What do private capital investors want?
The key to attracting investment
capital down the road is
start building an attractive
investment environment now.
Start building
 an attractive
  investment
 environment
          now.
                         .
Start with the end in mind
The Right Management Team.
The Right Business Concept.
The Right Liquidity Horizon.
In wind energy
each stage of project
development is
heavily dependant
upon foundations laid
at an earlier stage.
So, things like the quality of
the land option and easement
agreements negotiated with
farmers early on in the
development process can
have a fatal impact in later
financing stages.
Consulting terms,
procurement contracts,
employment agreements: all
play a big part in the
attractiveness of the business
in private capital markets.
Start building
 an attractive
  investment
 environment
          now.
Start with the end in mind.
Dale & Lessmann LLP

								
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