b'04Key Features BDCs are exempt from many of the All BDCs, whether public or private,1940Acts requirements and benefitmust register a class of securities underfrom pass-through tax treatment. the Exchange Act and comply with ongoing public reporting obligations. BDCs serve as a critical source of capitalfor small and mid-sized U.S. businessesManaged either internally (by their own that often cannot access bank financing. employees) or externally (by an affiliated asset manager under a management contract).Types of Business Development CompaniesPublic BDCs Private BDCs Public BDCs raise capital through offerings Private BDCs raise capital through private registered under the Securities Act andplacements to accredited investors or typically list their shares on nationalqualified institutions, rather than through exchanges such as the NYSE or Nasdaq. public offerings. Public BDC shares trade daily, givingPrivate BDCs are often sponsored byinvestors liquidity similar to that of other private equity firms or financial institutions exchange-listed securities. with established investor networks. Public status provides broad retail access Private BDCs generally offer limited liquidity, but exposes investors to market volatilitywith redemptions negotiated or offered and trading at discounts or premiums periodically rather than daily.to NAV. While private BDCs avoid the volatility Public BDCs follow continuous disclosureof public markets, they are restricted to requirements, offering transparencysophisticated investors and institutions.comparable to that of public operating companies.Mayer Brown|Business Development Companies 17'