Creating A Better Financial Plan

Posted on: 14 June 2018

If your newly created company needs additional capital, gathering different investors may be a solid investment plan. A private placement broker-dealer can assist with this task, as they can put you in touch with many different financial institutions like venture capital firms and investment banks. To choose one of these broker-dealers correctly, though, you need to remember these tips.

1. Decide Between Big or Small 

There are predominantly two types of broker-dealer agencies you can work with: large and small. Both have their own distinct advantages depending on what you're looking for. Bigger agencies more than likely will have access to more resources and can thus get you in touch with a wide variety of potential investors. They may charge more, however.

Conversely, when you work with a smaller broker-dealer agency, you may not have to pay as much. They also don't represent as many companies and can thus give you more attention than say a larger agency. This individual attention may be instrumental in lining up the right investors quickly.

2. Be Wary of Sales Pitches 

Some private placement broker-dealers are so desperate for more business that they'll lay out these lofty claims, which they know they can't back up. You need to be wary of these claims so that your company doesn't partner up with the wrong broker-dealer and then see little results. 

Instead of listening to their promises, you need to look at their past success. How have previous companies benefited from working with the private placement broker-dealer? Once you have this tangible evidence showing how effective the broker-dealer has been over the years, you can make a more informed decision. 

3. Discuss Their Fees 

Unfortunately, these private placement broker-dealers don't offer their services for free. They will cost you money, but how much you end up paying can vary quite a bit from dealer to dealer. As a result, you need to discuss fees up front so that both you and the private placement broker-dealer are on the same page. Some dealers will offer an annual rate, while others will charge per visit. Then there are broker-dealers who charge each time you line up another investor. As long as you're well aware of these costs upfront, you can avoid miscommunication and potential conflict.

Private placement broker-dealers may be the perfect resource for lining up more investors, helping your newly created company generate capital. This financial partnership can remain positive over the years if you properly assess your broker-dealer options. For more information, contact a company like Luxor Financial Group.