Private Investment in Public Equity - What Issuers are Thinking About Preferred Stock Investments
In today’s credit environment many issuers are looking to de-leverage themselves via a private infusion of capital. Issuers evaluating capital infusions in the form of preferred stock PIPE (Private Investment in Public Equity) transactions are encouraged to navigate multiple layers of accounting literature, before arriving at an appropriate accounting position. Because some terms that make a transaction favorable to investors are the same terms that create friction for the issuer, a push-back from issuer is common in such transactions.
Gaining a better understanding of the pitfalls, and offering investment vehicles that successfully accomplish the objectives from the perspective of these issuers, can help increase the chances for investors to negotiate “attractive” PIPE transactions.