As general economic conditions improve but interest rates for conventional debt remain high, we expect to see in the coming year an increase in private companies that access capital by selling their own equity interests. Equity interests that are sold will be regulated at various state and federal levels as “securities,” bringing with them a host of compliance risks. First and foremost, the Securities Act of 1933 (Securities Act) provides that securities being sold in the U.S. must either be 1) registered with the U.S. Securities and Exchange Commission (SEC), typically via an initial public offering, i.e., an IPO, or 2) exempted from such registration.
