How to Choose a Broker-Dealer for Your Private Placement Offering
- Sara Judd
- Oct 13
- 2 min read
Choosing the right broker-dealer for your private placement offering can make a significant impact on your capital raise. Although this process can seem like a formality, it is a strategic decision that influences the efficiency of your process and your ability to stay compliant in an increasingly complex regulatory environment.
First and foremost, any broker-dealer you're considering should be properly registered with FINRA and the SEC. It is also important to review which states the broker dealer is registered in to make sure they are able to support the locations where you are raising capital. You can verify a firm’s registration status and check for any past disciplinary actions using FINRA’s BrokerCheck tool (FINRA BrokerCheck). A clean regulatory record goes a long way toward building trust, for you and your potential investors.
It’s also critical to evaluate how the broker-dealer handles due diligence. FINRA has been increasingly vocal about the need for thorough diligence in private placements, warning that inadequate review can expose issuers and brokers to enforcement actions. A competent broker-dealer will conduct comprehensive reviews of your management team, financials, risk disclosures, and offering documents. Their role is to be a gatekeeper, with the expectation from regulators to have proper procedures in place to protect investors from fraud or material misrepresentations.
Industry experience is also an important factor to look at while choosing a broker-dealer. Some specialize in venture capital or tech startups, while others focus on real estate syndications. A broker-dealer that is familiar with private placements, your industry, and your asset class will be far more effective at positioning your offering and engaging the right investor base.
You’ll also want to get clarity on how the broker-dealer is compensated. Fees in private placements typically involve a percentage of capital raised, but they may also include upfront retainers or due diligence fees.
Another consideration is technology infrastructure. A broker-dealer with modern tools for onboarding, document tracking, and investor communication can simplify your capital raise by reducing friction and keeping you organized.
Finally, don’t underestimate the value of partnering with an organization that has similar values and objectives. Any broker-dealer you choose is now a business partner. Talk to their other clients, ask for references, and make sure their communication style, ethics, and business philosophy align with yours. Trust and transparency are critical, especially when you're navigating a complex raise with regulatory scrutiny.
In short, the best broker-dealer for your private placement is one that brings together a strong compliance culture, relevant experience, clear and fair compensation, and the tools and temperament to support your goals. Take the time to vet your options carefully as finding the right partner can significantly increase your chances of success.
Sources:
FINRA BrokerCheck – Tool to verify broker-dealer registration and disciplinary history
Wolper Law Firm – “Learn How Due Diligence Regulations Protect Investors Seeking Private Placement Transactions”
SEC – “Investor Bulletin: Private Placements Under Regulation D”
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