Private Placement Memorandum

Private Placement Memorandum

Prospectus.com is a world leader in private placement memorandum writing services.  From New York to Hong Kong, from Singapore to London, there isn’t a firm anywhere that has been involved in more private placement memorandum documents than Prospectus.com.  A private placement memorandum (also referred to as a “PPM”) is a document used to raise capital.  Within the memorandum will be the details of the securities being offered to investors, as well as vital company information such as the market opportunity, financial projections, business strategy, risk factors, management team and the subscription agreement documents.  Normally, an issuer will sell securities in the form of debt or equity, such as shares or common stock for equity, or notes or bonds, convertible debt and more.  Our team has been writing private placement offering memorandum documents for over 15 years and have been involved in helping hundreds of innovative entrepreneurs raise capital from accredited investors.

Types of Private Placement Memorandum

There are many varying types of private placement memorandums.  The type of offering will determine the specific nature of the PPM.  The two main offering memorandum documents used throughout the world are equity private placement or a debt private placement.

Equity:  In an equity offering, a company will sell an ownership stake.  The most common type of equity private placement memorandum is one that sells shares or stock in a company.  In addition, an LLC or an LP may sell units, or limited partnership interests of the company.  Some companies issue “sweeteners,” such as preferred shares, also known as preferred stock.

Debt:  In a debt offering, a company will sell securities such as a bond or a note.  In a debt private placement memorandum, a company will detail the securities being sold, such as the interest rate, maturity date, and other terms of the notes or bonds.  In other types of debt issuance offering memorandums a company might offer convertible bonds or convertible notes.  In this type of transaction, the debt securities will convert to equity at a pre-determined date, or in the event of ‘trigger event’ that enables the holder of the note to convert into equity shares of the Issuer. 

Rules: In addition to debt or equity, there are various national and in some cases, international rules that apply to each private placement memorandum.  For example, US SEC Rules 504 ,505 and 506 of Regulation D (Reg D).  Included in Reg D are also 506b and 506c offerings.  There is also SEC Regulation A (Reg A) and Regulation A+. Offerings advanced within the equity and debt private placement include those governed by SEC Regulation S (Reg S) and Rule 144A.

Whether you require an equity PPM for an equity offering or a debt private placement memorandum, our team at Prospectus.com can assist.

Why Write a Private Placement Memorandum?

This question is often asked by seasoned and non-seasoned entrepreneurs.  What is it about a PPM, or a private placement memorandum, 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 shows that one cares for their  business and took the time and effort to create one.

The can be same for the PPM, or private placement memorandum, especially if one is seeking capital for their business.

Main Reasons for Writing a Private Placement Memorandum

  1. The PPM is intended to add protection to the company and provide prospective investors with clearly-stated terms and conditions. The PPM does this by disclosing the overall business strategy and the pertinent risks of the business.  Any potential investor should do their homework before investing.  If the proper risks are outlined in the private placement memorandum, in the event of a default or business failure (e.g. the company goes bankrupt because one of the stated risks was encountered), the issuer of the offering will have protection from investors who are seeking monetary recourse.
  2. The PPM is a professional presentation of your investment offer and outlines the business opportunity for investors. Aside from the need to incorporate various rules and disclosures imposed by state and federal regulators that guide private placement offerings outlined in the PPM, this document provides credibility and integrity to those who are considering the investment.  A private placement offering memorandum that is properly constructed indicates that the issuer has conformed to best practices by providing the necessary documentation to properly raise money and to properly accept money.

What Prospectus.com Can Do

Our team assists in the drafting of the PPM for all types of entities and in all jurisdictions.  This includes entities such as LLC s and limited partnerships, as well as corporations.  We are equally fluent in writing PPMs for offshore hedge funds and other offshore and onshore companies.  We also specialize in PPM vehicles in Europe, Asia and Middle-East regions which have their own PPM structures.  Our company has written PPM private placement memorandum documents for Issuers seeking to raise capital across the full spectrum of industries, including real estate, green tech, financial technology (fintech), hi-tech, social media enterprises, space and underwater exploration, mining, food establishments, consumer products, hospitality (hotels, restaurants and resorts), equity crowdfunding, and much, much more.

Contact us for a free initial PPM consultation.

Contact Us Today To Schedule Your Free Consultation


Read More

Private Placement Memorandum