Private Placement Memorandum PPM
The question is often asked: why write a private placement offering memorandum document? It is both expensive and time consuming and for the newcomer in the capital raising space the writing of a private placement memorandum aka PPM can seem antiquated and over zealous in terms of the legal procedures. Not to mention it takes time write the PPM and can cost significant sums of capital.
The most reasonable answer as to why one should write a private placement memorandum is for the security or protection of the entrepreneurs. The PPM, as its referred, or the offering memorandum, lists the potential risk factors associated with the company’s business plan and strategy. Sophisticated investors will immediately recognize risks in a PPM and based up on their risk tolerance will decide, willingly, to invest in the company. If the company goes bankrupt or has an episode where the business plans have faulted, normally such scenarios would be covered in the risk factors. This would, in theory, deter upset investors pursuing the owners of the company for legal action or to try and recoup their capital.
Terms of the Offering
Another reason to write a PPM and give to an investors, putting aside the SEC rules, is that the private placement memorandum highlights what the company will offer investors for their capital commitments. If the company is selling common stock then the terms of the offering which are found inside the private placement document will detail the stock price, terms and more. The private placement memorandum then is primarily used to showcase what the company is offering for the money it will receive. Without the PPM it is highly unlikely sophisticated investors will “lay out” the cash for the stock.
Our PPM or Private Placement Memorandum database is the largest depository of private placement offering memorandum document templates in the world. This is bold statement you will not find a more robust private placement memorandum library anywhere. Used by law firms, lawyers, universities, business schools, investment banks and many more, our offering memorandum private placement library is the single largest public or private database found anywhere available online.