Gain a Better Understanding of PIPEs

5 Things You May Not Know about PIPEs

1. Speed to Market

The total process can be completed in as little as two to four weeks.

2. Confidential

There are no disclosure requirements until after investors sign a definitive purchase agreement.

3. Reduced Expenses

The costs associated with issuing a PIPE are significantly less than those associated with a public offering.

4. Expansion of Investor Base

PIPEs can only be offered to accredited investors, leading to an increase in accredited and institutional investors.

5. Limited Due Diligence

Investors rely primarily on public information and are able to complete diligence in a short amount of time.

5 Things You Should Know About PIPEs

1. Investors will require a discount to market prices

2. Investors may require warrants as an additional incentive to having to hold the shares

3. PIPE offerings can only be marketed to accredited investors

4. An Issuer cannot sell more than 20% of its outstanding stock at a discount without receiving prior stockholder approval

5. PIPE purchasers will request limits on the number and length of future black-out periods

5 Things PIPE Investors Look For

1. Discount to Market

2. Defined Volatility in Share Price

3. Additional Warrants at Fixed or Variable Prices

4. A High Level of Current Float

5. A High Volume of Shares Traded Daily and Weekly

5 Common PIPE Structures

1. Common stock at a fixed price

2. Common stock at a fixed price with fixed or variable price warrants

3. Common stock at a variable price

4. Common stock at a variable price with variable price warrants

5. Convertible Preferred Stock or Convertible Debt

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Rick Herbst
Partner
Investment Banking
Ph: 312.648.6661
Email


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