A private placement raises funds by allowing outside private investors to purchase shares in the firm. Such a deal may be difficult to arrange, however, as any new investor(s) may suspect the original owners’ motives and question their ability to successfully invest the funds to create future value. Arrangements for private placements may be made by a business broker or an investment banker, who earns a commission for finding a qualified investor. To limit the cost and ensure the compatibility of the new owners, current shareholders also may seek additional investors among their friends, relatives, and other contacts. A private placement of equity can provide needed new capital, but only at the cost of diluting ownership. The original owners now must share control, voting rights, and company profits with additional investors. In addition, there is the problem of placing a value on the firm’s privately held common stock. Private firms typically lack audited financial statements and other safeguards that reduce agency costs. Thus, new investors may resist paying what the current owners feel is a fair price for their equity. Equity investments in private firms can impose a great deal of liquidity risk because no well-developed secondary market trades shares in firms that are not publicly owned. In recent years, the Securities and Exchange Commission (SEC) has taken some steps to increase liquidity in the private placement market. Nonetheless, a great deal of liquidity risk still remains for investors in private firms.