Offering Memorandum

Investor Offering Memorandum

An Investor Offering Memorandum is a document that is mostly necessary in order for companies to obtain funding from investors. The team at Prospectus LLC is responsible for the writing of over five thousand offering documents (prospectus, PPM, offering memorandum), covering more than fifty jurisdictions across the globe. With our experience, our team can make sure that your offering memorandum is well-written, thorough, and that it follows regulation.

The Investor Offering Memorandum (OM), also referred to as the offering memo, is a written document that details securities that a business is offering. This includes details surrounding the type of securities offered, their pricing, biographies of the managing officers, and any other relevant information about the business. The OM is a comprehensive document that is meant for the prospective investor, who in turn uses the document as a deciding factor in whether or not to invest in the business.

Different Types of Offering Memorandum

Equity: One type of offering memorandum is the equity OM which is utilized by businesses who want to issue stock in exchange for capital from investors. The equity offering memorandum is also sometimes used by various hedge or mutual funds. When a company sells a piece of its company, a stock or a share, they are giving away some ownership and other benefits. This is true for public companies who sold their common stock through an IPO, however, this is not always the case for funds. Hedge or mutual funds often issue participating shares, or other types of stock, that do not particularly give ownership, or sometimes voting rights, to the stockholder. For private placements, or private sales of equity, an offering statement is required for investors. This is so that prospective investors can have all the necessary information they need, and then they can use that information to make an informed decision about whether or not to invest.

Debt: Some companies may want to issue debt rather than equity when raising capital. These often take the form of notes, normal and convertible bonds, debenture and many other forms of debt. Even if a company wants to obtain funding through the issuance of debt, they still need to write an offering memorandum. In this case, the offering memorandum will provide key information such as the fundraising goal, the maturity date of the debentures, notes, or bonds, interest rates, and all other relevant information.

Worldwide Term Usage

The usage of offering memorandum is very fluid. It simply means a document that encompasses all information regarding a company’s desire to issue securities, debt or equity. There are many other terms that can be used to mean this very same definition. Some include offering circular, private placement memorandum (PPM), prospectus, and red herring.

Subscription Agreement

At the end of the OM, there will be a subscription agreement, which simply consists of the contract between the business issuing the securities, and the investor. This contract includes all relevant details about the methods the investor can use to pay the company. The subscription agreement is of the utmost importance to the finished offering memorandum. Without this essential final piece, there is no way for the investor to agree to the terms and invest in the company.

Here at Prospectus LLC, our experienced team of lawyers and consultants can assist in the creation of your OM for the issuance of any type of security. Please don’t hesitate to contact us for a free consultation.

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Investor Offering Memorandum

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