Why Write a Private Placement Memorandum?
This question about write a private placement memorandum is often asked by seasoned and non-seasoned entrepreneurs. What is it about a private placement memorandum - also called an offering memorandum, or “OM” for short, or often referred to as “PPM” for short as well - that drives a company to create one?
Arguably, the business plan is the most important document for any company. A well written and researched business plan can act as a guide or road map for the company. Although no one can predict how the market will react to the introduction of a new product or service, and even though one’s business plan may not be accurate 100% of the time, it still show that one cares for his or her business.
This can be same for the private placement memorandum, especially if one is seeking capital for their business.
Main Reasons for Writing a Private Placement Memorandum
1. A private placement memorandum is supposed to add protection to the company. The offering memorandum does this by disclosing the pertinent risk of the business. An potential investor should do his or her homework before investing. If the proper risks are outlined in the private placement memorandum, and then an unfortunate event occurs, the company goes bankrupt because of one of these risks, the entrepreneur should have some protection from investors seeking recourse of their investment.
2. A private placement memorandum is professional. Aside from the need to have various government rules and disclosures that guide private placement offerings outlined in the PPM, the document looks good and professional (well, its supposed to) to those who are considering an investment. It shows that one has done the necessary paper work to properly raise and to properly accept .
PPM.net assists in the drafting of the private placement memorandum. Our company has written private placement memorandum documents for such diverse industries as real estate, hi-tech, space and underwater exploration, food establishments, hotels and resorts, and much, much more.