Private Equity Placements and Illiquidity Discount

25 Pages Posted: 5 Apr 2010 Last revised: 30 Jul 2010

Rahsan Inget

Purdue University

Date Written: October 2009

Abstract

This paper presents evidence on the private placement discounts for a large sample of private placement transactions completed by public companies between 2002 and 2007. Using detailed information about the restriction duration for the unregistered common stocks placed, I analyze whether the lack of liquidity of unregistered shares has an impact on the issue discounts. My results suggest that illiquidity is not priced into private placement discounts. Consistent with the previous literature, I find that revenues and intangible assets of the issuer and the size of the placement have a significant impact on the issue discounts.

Keywords: Private equity placements, marketability discount

JEL Classification: G30, G32, G39

Suggested Citation

Inget, Rahsan, Private Equity Placements and Illiquidity Discount (October 2009). Available at SSRN: https://ssrn.com/abstract=1583562 or http://dx.doi.org/10.2139/ssrn.1583562

Rahsan Bozkurt Inget (Contact Author)

Purdue University ( email )

West Lafayette, IN 47907-1310
United States

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