The costs for a company to prepare, implement and complete a private placement are always lower than those associated with a public offering due to the absence of many expenses associated with the full registration process. Private placements also take significantly less time than their public counterparts.
Unlike debt, in a private placement the company is selling ownership interests in the company itself, so it records no corresponding liability and the placement has a positive impact on the financial statements by increasing the company's assets without an increase in liabilities.
Disadvantages of a Private Placement
The major drawback of a private placement is that it will always result in a decrease in the percentage of ownership of the current shareholders, which does not occur if the company raises capital through debt. For this reason, management must be comfortable that the value derived from application of the capital raised is sufficient to offset this dilution offset this dilution.
The Bottom Line
As long as shareholders are comfortable with the dilution of ownership, a private placement can be a cost-effective method for a company to raise small but significant amounts of capital in a relatively short time while maintaining the company's ability to incur additional debt
Market Data 
Markets 
