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    Bought Out Deal

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    alkazum
    A bought out deal is a method for private companies in India to issue securities through an underwriter like a bank or financial institution. The underwriter purchases the securities from the company and then sells them to the public within an agreed upon timeframe, saving the company costs and time of a public issue. Key advantages include speedy sale of securities at a realistic pre-negotiated price with investor protections, while disadvantages include potential sponsor control of the company or market manipulation risks.

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    Bought Out Deal

    Uploaded by

    alkazum
    350 views1 page
    A bought out deal is a method for private companies in India to issue securities through an underwriter like a bank or financial institution. The underwriter purchases the securities from the company and then sells them to the public within an agreed upon timeframe, saving the company costs and time of a public issue. Key advantages include speedy sale of securities at a realistic pre-negotiated price with investor protections, while disadvantages include potential sponsor control of the company or market manipulation risks.

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    Bought out deal

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    A bought out deal is a method for private companies in India to issue securities through an underwriter like a bank or financial institution. The underwriter purchases the securities from the company and then sells them to the public within an agreed upon timeframe, saving the company costs and time of a public issue. Key advantages include speedy sale of securities at a realistic pre-negotiated price with investor protections, while disadvantages include potential sponsor control of the company or market manipulation risks.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    350 views1 page

    Bought Out Deal

    Uploaded by

    alkazum
    A bought out deal is a method for private companies in India to issue securities through an underwriter like a bank or financial institution. The underwriter purchases the securities from the company and then sells them to the public within an agreed upon timeframe, saving the company costs and time of a public issue. Key advantages include speedy sale of securities at a realistic pre-negotiated price with investor protections, while disadvantages include potential sponsor control of the company or market manipulation risks.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Bought out deal

    A bought out deal is a method of offering securities to the public through a sponsor or underwriter (a
    bank, financial institution, or an individual). The securities are listed in one or more stock exchanges
    within a time frame mutually agreed upon by the company and the sponsor. This option saves the
    issuing company the costs and time involved in a public issue. The cost of holding the shares can be
    reimbursed by the company, or the sponsor can offer the shares to the public at a premium to earn
    profits. Terms are agreed upon by the company

    The Securities and Exchange Board of India mandates that only private companies can choose this
    method of issuing securities

    Advantages

     Speedy sale – The bought out deals offer a mechanism for speedy sale of securities
    involving lower issuing cost.
     Freedom – The bought out deals offer freedom for promoters to set a realistic price &
    negotiate the same with the sponsor.
     Investor protection – The bought out deals facilitates better investor protection as the
    sponsors are rigorously evaluated and appraised by the promoters before off-loading the issue
     Quality offer – The bought out deals help in improving the quality of capital flotation and
    primary market offering.
    Disadvantages

     Sponsors may take control of the company as they own large number of shares.
     When markets are down sponsors may incur losses.
     The risk of market manipulation by the sponsor such as insider trading is high.
     Sponsors can make large profits at the expense of small investors.

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