PIPEs: A Guide to Private Investments in Public Equity: Revised and Updated Edition

319 Pages·2006·2.636 MB·English

by  Kim, E. Kurt, Dresner, Steven

“A complete guide designed by qualified professionals to
help companies, investment professionals, and investors
better understand PIPEs as a financial tool.”
– Mitch Hull
President, Hull Capital Management, LLC
Private investments in public equity (PIPEs) offer a practical financing
alternative for companies seeking capital and a unique asset class for
investors. For practitioners who know how to identify and execute trans-
actions, PIPEs present a growing opportunity.
This revised and updated guide presents the views, voices, and invalu-
able expertise of leading practitioners from all specialties in the field. The
book is divided into three parts: “The Business of PIPEs,” which provides
a historical backdrop and overview; “Regulatory Landscape and Structural
Alternatives,” which details the legal framework and transaction structures;
and “Deal Flow,” which offers the investor’s perspective on negotiating
deals.
With detailed discussions, ranging from the origins of the marketplace and
deal structures to legal considerations and due diligence, and from finding
new opportunities to trading strategies, this book provides a clear window
to the inner workings of this active area of the small-cap market. Investors,
financial analysts, investment bankers, corporate and securities attorneys,
and executives of public companies will find substantial value in the pages
of this book.
Praise for
PIPEs: A Guide to Private Investments in Public Equity
Revised and Updated Edition
Edited by Steven Dresner with E. Kurt Kim
“A valuable and comprehensive update on the PIPEs market, with insights
from the bankers, lawyers, and buyers. This is an important reference for
anyone working with PIPEs.”
Paul Roth
Partner, Schulte Roth & Zabel LLP
“A complete guide designed by qualified professionals to help companies,
investment professionals, and investors better understand PIPEs as a fi nan-
cial tool.”
Mitch Hull
President, Hull Capital Management, LLC
“The PIPE space is made up of so many moving parts, but this book turns it all
into a smooth-running machine. Everyone in this business has learned to rely
on Steven and Kurt for clarity and understanding.”
Mitch Levine
Founder and Managing Partner, Enable Capital Management
“S teve Dresner is the most knowledgeable person in the world of PIPEs.
This PIPEs book is the bible of the industry and the source for anyone seeking
straight answers regarding this otherwise complicated subject.”
Dian Griesel, PhD
Founder and Chairman, The Investor Relations Group
“ The first book to explain the trends in the PIPE industry, this revised and
updated edition is essential reading to keep up with the changes and make
the best use of this important fi nancing vehicle.”
Ramnarain Joseph Jaigobind
Managing Director, Global Equity Capital Markets, Maxim Group, LLC
“T he PIPEs market is one of the most dynamic areas of investment
banking today. Whether you are an investor or an issuer, banker, or
student, this book is a must-read for understanding this increasingly
important area of the equity and equity-linked capital markets. I strongly
recommend this publication to both market professionals and laypersons
interested in the PIPEs market.”
Kim S. Fennebresque
Chairman and CEO, Cowen and Company, LLC
“This is a must-read for attorneys, hedge funds, investment bankers, traders,
and all companies looking to raise capital. This book will become a handy
reference to the investment community.”
Ron Nash
Past president and founder, Nash Weiss & Co.
Praise for the First Edition
“This book is a great reference that all PIPE investors should have in
their offi ces.”
Barry Kurokawa
Cofounder and Managing Director, ProMed Management
“This collection of essays sheds light on the historical, regulatory, and
transactional aspects of these often mysterious securities. Both prac-
titioners and students of the private equity industry should find this book
valuable.”
Josh Lerner
Jacob H. Schiff Professor of Investment Banking
Harvard Business School
“An impressive array of banking, venture capital, and legal professionals
share their insights into this poorly understood but increasingly impor-
tant financing alternative for smaller to midsize companies. Firms and
investment bankers looking to raise capital and investors looking for
alternative investment approaches will find this authoritative reference
of great value.”
Ted Barnhill
Professor of Finance and Chairman, Department of Finance
The George Washington University
“This book provides an excellent analysis for issuers, legal advisers, and
investors. It is a valuable resource for anyone involved in or considering
involvement with PIPEs, or considering issuing or investing in PIPEs.”
Michael B. Pollack
Partner, Reed Smith LLP
“The first truly comprehensive book on PIPEs … as an active participant in
the sector, I was impressed by their ability to bring in the best minds
in the business for their detailed thoughts on structuring, strategy, and
pitfalls for the issuers, advisers, and investors. Great job.”
Jonathan Silverstein
General Partner, OrbiMed Advisors LLC
“ How does one learn to utilize the most popular fi nancial tool for rais-
ing equity capital in the next decade? It is by reading PIPEs, the leading
guide with the combined expertise of more than a dozen thought leaders,
sharing their cumulative knowledge in this fi eld.”
P. Morgan Kash
Cofounder and Chairman, Two River Group Holdings
“ A highly useful treatise in an emerging area of the law.”
Joseph W. Bartlett
Of Counsel, Fish & Richardson P.C.
Founder and Chairman, VC Experts
“I n recent years, the importance of PIPEs has grown considerably, but
reference material has lagged far behind. This excellent book fills the gap
with a comprehensive treatment by highly qualifi ed contributors.”
Andrew Metrick
Associate Professor of Finance

The Wharton School of the University of Pennsylvania
PIPEs
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by David N. Feldman with contributions by Steven Dresner
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Due Diligence for Global Deal Making:

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The Securitization Markets Handbook:

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———
A complete list of our titles is available at
www.bloomberg.com/books
Attention Corporations
This book is available for bulk purchase at special discount. Special editions or
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Markets, or phone [phone].
PIPEs

A Guide to Private Investments
in Public Equity
REVISED AND UPDAT ED EDITION
edited by
Steven Dresner
with E. Kurt Kim
Bloomberg Press

New York
© 2003, 2006 by Steven Dresner. Chapters 1–11 and Afterword © 2003, 2006 by Bloomberg L.P.
All rights reserved. Protected under the Berne Convention. Printed in the United States of America.
No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form
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PrivateRaise, PrivateRaise.com, and Equity Private Placement (EPP) Database are trademarks of
PrivateRaise, L.L.C.
This publication contains the authors’ opinions and is designed to provide accurate and authoritative
information. It is sold with the understanding that the authors, publisher, and Bloomberg L.P. are
not engaged in rendering legal, accounting, investment-planning, or other professional advice. The
reader should seek the services of a qualified professional for such advice; the authors, publisher, and
Bloomberg L.P. cannot be held responsible for any loss incurred as a result of specific investments or
planning decisions made by the reader.
This book does not constitute or contain advice to enter into any transaction. All legal and regula-
tory information is provided for informational purposes only and does not constitute advice on these
matters. Investments in PIPE securities involve significant risks and are suitable for only certain
institutional “accredited investors,” as such term is defined in Rule 501(a) of Regulation D under
the Securities Act of 1933, as amended. Prospective issuers of and investors in PIPE securities should
consult with their own legal and financial advisors before engaging in any transaction involving the
issuance or purchase of a PIPE security.
First edition published 2003
Revised and updated edition published 2006
1 3 5 7 9 10 8 6 4 2
ISBN-13: 978-1-57660-194-5
The Library of Congress has cataloged the earlier printing as follows:
PIPEs : a guide to private investments in public equity / edited by Steven Dresner with E. Kurt Kim.
-- Rev. and updated ed.
p. cm.

Includes bibliographical references and index.

ISBN 1-57660-194-3 (alk. paper)

1. Private investments in public equity--United States. 2. Corporations--United States--Finance.
I. Title: Guide to private investments in public equity. II. Dresner, Steven. III. Kim, E. Kurt
HG4963.P57 2005
332.6--dc22 2005023535
Acquired by Jared Kieling. Edited by Tracy Tait