Writing a prospectus to raise capital is virtually a prerequisite. No strong investor or venture capital group will take a company seriously without a well-written professional offering Prospectus document. A prospectus is used in an equity offering to sell shares, stock or units, which is essentially an ownership stake in the company. For a debt offering, a prospectus is used to outline the terms of the bonds or notes, such as the maturity date and interest. Our team has been preparing and writing prospectus documents for debt and equity offerings for nearly 20 years. Having consultants or lawyers draft your prospectus is always recommended, as the document itself is the single most significant disclosure paper you will give to investors for funding consideration. While the prospectus is the most important disclosure document, which will outline the securities rules and terms of the offering, a well written business plan is also important for any company raising money.
The prospectus offering document is a valuable opportunity for the issuers to show off their company and its product and services. This opportunity should not be passed over by creating a weak prospectus.
To better explain the rationale of writing a prospectus, it would be good to view the two main capital raising structures used worldwide: selling debt and equity securities.
Equity: In an equity offering companies sell ownership. In an IPO, for instance, most companies sell common shares to the public, while in a private offering the securities may have a different name. While an entity like a hedge fund or mutual fund also sell “shares” in many cases this grants the purchaser ownership rights without voting rights, i.e. no say in the management of the fund. The offering prospectus document would detail the ownership and voting rights of the entity.
Debt: A debt issuance offering is when a company takes investment capital from investors and “promises” them a return on their money and their money back (interest rate and maturity date). Debt offerings are a popular way to raise capital as the issuer does not need to give up any ownership. But the issuer is on the hook for payment return and if late on payment equity can often be taken by investors or creditors.
Our staff at Prospectus.com can write either your equity offering or debt issuance, both for a public placement and a private placement.
Prospectus for a Private Placement
The private placement market is one of the largest investment markets in the world, which includes regulations like Reg D and 144A. Within the private placement offering market are a plethora of investment opportunities, an abundance of regulations to follow and attorneys and consultants that claim they have your interest at heart. Our team prides itself on producing high quality work with the fastest turnaround rate so no time is lost. We are experts in the private placement universe.
Each prospectus offering document should include the subscription documents, which consist of the investor questionnaire and the subscription agreement. The purpose of the investor questionnaire is to qualify any investor who wants to allocate his/her capital. It is important to vet any potential investor. The subscription agreement is the contract between the issuing company and the investor. Both the investor questionnaire and the subscription agreement must be thoroughly filled out so both parties can decide if the investment is the correct one for them.
Our firm has years of experience drafting securities documents and is confident we can assist with your Calgary Prospectus. Feel free to contact us anytime, or call us to setup an appointment at any one of our global offices.
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