Acquiring, divesting, or merging with a company can generate tremendous long-term value. The complexities associated with such transactions must be managed to assure that anticipated benefits are realized.
Closing documents include agreements between the Issuer and the Investor wherein the parties commit to participate in the offering and the specific terms of the investment relationship. These documents are executed by the Investor and/or by the Issuer as appropriate to the nature of each agreement (see below per each type of agreement).
The investment returns of many “alternative investments” result from the fundamental performance of the underlying business or project versus the more general swings of the equity and bond (“fixed income”) markets. Alternative investments tend to offer “absolute” and “non-correlated” returns based upon issuer performance and are much less“market driven” (such as interest rate moving up and down in the bond markets or stock prices change in the equity markets) .
In April of 2012 the US enacted The JOBS Act, which contained provisions intended to expand private capital formation in the US, both in terms of issuer access to capital as well as the individual investor participation in private offerings. The new law enables the use of public advertising through the internet and other media channels to communicate information relate to a private placement offerings.
As of September 23, 2013, all investors participating as Accredited investors in Regulation D, Rule 506c (and the legacy Rule 506b) private placement offered by CFG must verify, through presentation of third-party validated information, that their financial status qualifies them as an Accredited Investor. In the past, self-verification by the Investor was sufficient. After September 23, 2013, self-verification is no longer sufficient to qualify as an Accredited Investor, third party verification is required under newly the adopted SEC Rule 506c.
Under the US federal securities laws, all securities offered for sale to investors(both debt and equity) require registration with the Securities Exchange Commission (SEC) unless the securities qualify for one of the exemptions from registration which are specified in the Securities Act of 1933 (the “Act”). The manner of offering a privately placed security falls under Section 4(2) of the Act.
Evaluating the risk of a potential investment is arguably the most important aspect of any investing activity, whether as part of a private securities offering or for a publically registered investment. No investment is without risk, and losses will inevitably happen within a portfolio. Limiting losses and achieving the projected returns of performing investments is therefore critically important.