Frequently Asked Questions
Our clients sometimes have questions regarding Bristol Investment Group and our role in the private placement marketplace. The following are some of the more frequently asked questions:
Who Invests in Structured Equity Financings?
At What Price Can I Sell Stock?
What are the Potential Risks?
Why Should I Use Bristol?
What is Bristol's Compensation?
Who
Invests in Structured Equity Financings?
Institutional investors are actively investing in privately placed equity,
Convertible Preferred securities and Equity Lines of Credit. In 2001,
there were over 900 private placements for public companies, raising $12.4
billion. Of private placements in amounts below $50 million, approximately
$7 billion was raised in 2001. Recent private placement financings have
been done for the following companies: On Command Corp. raised $60 million,
International Fibercom raised $10 million, Medix Resources raised $10
million iBeam Broadcasting raised $30 million, and Biopure raised $75
million. PIPE investors include large institutional investors such as:
At What Price Can I Sell Stock?
Using traditional private placement structures, in which common stock
may be sold around the public market price, the financing process may
take three months to arrange. Typically, in a structured PIPE financing
were the issuing company has good trading volume in their stock, the placement
may take only two weeks to put into place. In the structured PIPE financing,
the price at which stock is sold will be set at a mutually agreeable discount
to the market price. Bristol is experienced at negotiating variations
in structure to accommodate individual financing requirements. Bristol's
experience helps companies understand which structure is best suited to
their needs and best minimizes financing structure risk. "
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What
are the Potential Risks?
Private placements of new equity capital are viewed positively when the
infusion of capital is seen as growth capital. The biggest concern with
private placements of common stock is dilution resulting from the sale
of new shares. Convertible Preferred securities are structured at a fixed
conversion price or at a floating discount to the market price of the
common stock at the time of conversion. Establishing a minimum stock price
or floor below which the investor may not convert can offset this open-ended
risk, and we work hard to include this feature in all Convertible Preferred
financings. Selling Straight Equity at a discount or an Equity Line of
Credit offers greater flexibility to the issuer and reduces the risk of
stock price fluctuation.
Why
Should I Use Bristol?
Bristol has substantial experience in structuring the private placement
of equity securities. The firm is proud of its reputation for delivering
on its financial commitments. As a registered broker/dealer with the National
Association of Securities Dealers (NASD) and as a member of the Securities
Investor Protection Corporation (SIPC), Bristol's credentials and expertise
provide comfort that the financing will be carried out in accordance with
all SEC rules and regulations.
What is Bristol's Compensation?
Fees for arranging equity financing are paid only upon successful completion
of a financing. Fees are based on a percentage of the total amount raised
by the Company.
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