Which of the following describes private placement?

The description of private placement accurately refers to the process where a portion of a company is sold to a private investor rather than being offered to the general public. This method is often utilized by companies seeking to raise capital without going through the extensive regulatory requirements and costs associated with a public offering. By engaging with select investors, companies can negotiate terms that are mutually beneficial and often conduct the transaction with less market exposure.

In this context, private placements allow companies to maintain greater control over the ownership structure, attract specific investor profiles, and often close financing more quickly. This method is particularly advantageous for startups and growing businesses looking for capital injections without immediate pressure from a public shareholder base.

The other options relate to different financing methods or company transactions that do not fit the definition of private placement. For example, selling shares to the public pertains to public offerings, while purchasing shares from the open market does not involve private negotiations with investors. Furthermore, the acquisition of company assets by a competitor involves a different type of transaction entirely, which focuses on asset purchases rather than equity financing.