Private Placement Broker Dealers


Private Placements come in many shapes sizes and Regulatory designations; Regulation D, Regulation S, and my new favorite, Regulation 506 (c) among others.

Regulation 506 (c) allows for Companies and Broker Dealers to utilizes "General Solicit" which basically means that they can market freely to attract accredited investors from all over with whom the Company or the Broker Dealer does not have a prior relationship with. This allows for a tremendous net to be cast which has a dual effect: 1) to attract investors to a particular deal and 2) to bring more clients to the Broker Dealer for standard investing.

Currently, the world of Broker Dealers is diminishing. There are only around 4,000 Broker Dealers left. Of which, (aside from the big boys) only around half of those transact Private Placements or Alternative Investments.

The Holy Grail that Companies seek is a Broker Dealer which has hundreds of Brokers and Billions of dollars under Management which can be deployed for their deal. This DOES NOT happen. Broker Dealers and of course their Brokers are not bound to sell any particular product and as such, most of the time this winds up a futile effort.

There are many ways that Companies seek to tackle this problem. Buy a Broker Dealer? Build a Broker Dealer? Partner with a Broker Dealer? Private Equity Funds? Develop a website to attract investors? Hire a marketing Firm?

Maybe, it's a combination of them all?

When looking for a proper partner or acquisition companies must decide what business they are in? Is it their business which they seek to succeed in or do they want to dive into the regulated waters of the unknown?

The key to any Business Development plan is to actually have a plan and to decide which direction and the amount of time, effort and deployment of resources a Company is willing to make in the process, and of course, patience in getting to the end zone successfully.