Time — A secondary offering often can take four to six months from the start of due diligence, drafting of the prospectus, and filing of the registration statement, to the close of the transaction. By contrast, with a private placement the entire process can be completed in less than 60 days.

Expense — In a secondary offering, after legal and accounting fees, a company can incur $1 million or more in expenses before even going on the road to meet with potential investors. With a private placement, the issuer incurs minimal expenses unless the deal is completed. And at completion, the total cost for a private placement is a fraction of that for a secondary offering.

Stock price — When a company files a registration statement with the SEC for a secondary offering, it effectively broadcasts to the world that it is conducting a dilutive transaction. As a result, its stock can trade down 10% to 20% almost immediately. In contrast, in a private placement there is no registration statement filed until after the offering is completed. The offering is marketed on a limited basis to a select list of SEC-accredited institutional clients. Because it is exempt from registration, the transaction's impact on the company's stock price is potentially reduced.