Hedge Fund Offering Memorandum
Offering Memorandum can help you create a tailored Offering Memorandum for a hedge fund. A hedge fund is an investment fund that is open to a limited amount and type of investor. The hedge fund is, under law, allowed to make investments spanning a wide array of industries and products – others funds may, however, not be allowed to do this – while paying a performance fees to its manager.
Hedge Fund Risk and Openness
A hedge fund tries to mitigate risk and even offset possible investment losses by ‘hedging’ their investment strategies, mainly by short selling. Hedge funds are typically open to a limited number and type of investor, such as wealthy individuals or even accredited investors. These restrictions allow for an exemption in certain jurisdictions from the many regulations governing short selling, leveraging, fee structures, derivatives and the amount of liquidity in the investment fund. A hedge fund often binds itself to a certain investment outlook or strategy, including the types of investments it will allocate funds with and the fund’s leverage capacity or level. These disclosures are typically made in the hedge fund private placement offering memorandum.
An offering memorandum is an essential document for companies seeking to raise capital or debt financing. The OM can assist with liabilities issues with the issuers as well as the memorandum acts as a disclaimer by showing the risks of the company investment. A professional drafted Offering Memorandum details the company’s current position, from the minute details of the types of securities being issued (equity securities or debt securities like notes or convertible bonds), to the management team, the market, the risk factors and the overall business plan model of the company, including the financial projections and/or audited financial statements. The back of any offering memorandum encompasses the investor questionnaire and the subscription agreement, which collectively referred to as the “subscription documents”. Both are essential for an investor as he/she can fill out the questionnaire and the subscription agreement and make a payment for purchase of the stock or bonds or other securities.
Although the Offering Memorandum is first and foremost a document used to raise capital, the structure and presentation of the Offering Memorandum can add value to a company’s products and services and the management personnel as well by pinpointing the position of power and strength of each, which of course would be written in a compelling and professional, smooth flowing document. A OM indicates to investors that the issuer is serious and has gone the extra length to ensure regulatory compliance and good business practices. In the absence of formal business plan and offering memorandum to educate investors regarding the company’s model and structure it will be most difficult to raise money from investors.
Our team at Prospectus.com has years of experience writing offering memorandums for companies and funds worldwide for hundreds of varying industries and businesses. We work one on one with our clients during the Offering Memorandum drafting process and take it upon ourselves – in almost obligatory fashion – to assist our clients with their quest for growth once our services our complete.
Prospectus.com’s team has written and a hedge fund Offering Memorandum and business plan for both large ($5 billion) and small investment funds ($500,000). Our team can help structure your documents to ensure regulatory adherence, attractiveness and more.