Offering Memorandum

Offering Memorandum Preparation

An offering memorandum is often needed in order to raise capital from investors.  The Prospectus.com team has been involved in the creation and implementation of over 5,000 offering memorandum and prospectus documents spanning over 50 jurisdictions worldwide.  We can ensure that your offering memorandum is structured correctly.

The OM, as it is also referred to, or the “offering memo”, is document that outlines the sale of the company’s securities.  Such a document would include detailed information on the company’s securities being offered, the pricing of the securities, the market of the company, the management team and much more.  The offering memorandum is an all-inclusive document that, if warranted, can be given as a single document to an investor to provide information needed to make an investment decision.

Different Types of Offering Memorandum

Equity:  an equity offering memorandum is often used for companies that are selling shares, such as common stock or common shares, or for various funds such as hedge funds or mutual funds.  An equity transaction is when a company normally sells an ownership type stake in a company.  While this is the case for many public transactions via an IPO – where if you buy stock on the public market you are a part owner of the company – for funds, this is not necessarily the case.  Funds such as hedge funds may sell equity in the form of participating shares (even many classes of shares) but this does not necessarily grant ownership or even voting rights to the investor.  For all private transactions relating to the sale of securities, a document needs to be given to an investor in order for them to make an educated decision about investing.  While the prospectus is one such document and the private placement memorandum another, the offering memorandum is often given as well.

Debt:  For those companies that issue debt securities in the form of, for example, bonds, convertible bonds, notes, debentures and other securities offering types, an offering memorandum is also needed.  The OM will detail the amount one is raising, the maturity date, interest rates and many other variables and characteristics, including information, if need be, on clearing and settlement and depository services.

 

Worldwide Term Usage

The usage and popularity of the term offering memorandum is understood worldwide to mean a document, referred to as a “memorandum”, which details what the company is “offering” in return for investment capital.  Read it backwards and you get “memorandum offering”, (i.e. a document detailing the offering of securities).  In addition to the term “offering memorandum”, the most popular terms for such a document are a prospectus, an offering circular, a private placement memorandum, and a “red herring”.

Subscription Agreement

Finally, each offering memorandum will include the subscription agreement, which is a document that is essentially the contract between the investor and the company selling securities.  The subscription agreement outlines the terms, has numerous places for the investor to complete, and usually gives instructions where to send a check for subscribing to the securities, or bank wire details.  The subscription agreement is also of great importance to the offering memorandum, and in many cases is considered the “shoes” of the documents, while the rest of the memorandum is the “clothes”.  Said another way, without a subscription agreement, there can be no transaction between an investor and the company if there is no subscription agreement.

The Prospectus.com team of consultants and lawyers can help draft your offering memorandum for either debt or equity issuance in an effective, fast and affordable way.

 

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Offering Memorandum Preparation