Examining the Pipeline: A Contemporary Assessment of Private Investments in Public Equity ('PIPEs')

University of Pennsylvania Journal of Business Law, Vol. 11, p. 1, 2008

SMU Dedman School of Law Legal Studies Research Paper No. 00-42

55 Pages Posted: 24 Apr 2009 Last revised: 13 May 2009

See all articles by Marc I. Steinberg

Marc I. Steinberg

Southern Methodist University - Dedman School of Law

Emmanuel Obi

affiliation not provided to SSRN

Date Written: March 1, 2009

Abstract

This article analyzes the practical and theoretical underpinnings as well as recent regulatory developments impacting PIPEs. Specifically, the authors examine the traditional capital financing alternatives, primarily the registered offering and private placement option, the PIPE as a relatively new and emerging alternative to traditional avenues of capital formation, and the recent regulatory changes that are bound to have a tremendous impact on the long-term viability of the PIPE as a means for effectively raising capital. The authors conclude that, on balance, the PIPE, as a distinct capital financing mechanism, may be advantageous to both PIPE investors and affected issuers, particularly in light of current market conditions that continue to constrain many companies’ ability to access traditional sources of capital. However, the authors note that, while promising to revolutionize the way a number of affected companies raise capital, certain regulatory developments may impede the optimization of the cost and efficiency benefits inherent in the PIPE transactional structure. Whether these regulatory impediments merit kudos or criticism is explored herein.

Suggested Citation

Steinberg, Marc I. and Obi, Emmanuel, Examining the Pipeline: A Contemporary Assessment of Private Investments in Public Equity ('PIPEs') (March 1, 2009). University of Pennsylvania Journal of Business Law, Vol. 11, p. 1, 2008; SMU Dedman School of Law Legal Studies Research Paper No. 00-42. Available at SSRN: https://ssrn.com/abstract=1393813

Marc I. Steinberg (Contact Author)

Southern Methodist University - Dedman School of Law ( email )

P.O. Box 750116
Dallas, TX 75275
United States

Emmanuel Obi

affiliation not provided to SSRN ( email )

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