Private Placement Memorandum

Private Placement Memorandum Services – Offering Memorandum Preparation

Prospectus LLC is a global leader in private placement memorandum services. Our team is comprised of financial industry veterans who are fluent in best practices regarding the preparation and writing of private placement memoranda (PPM) and investor offering memorandum documents. The PPM is an essential document used by companies to obtain funding. Within this document will be pertinent information for potential investors, such as the type of security being issued, biographies of managing officers, risks and market opportunity, and the subscription agreement document. For the most part, the security issued will be in the form of equity or debt. Equity can look like common stock and shares, while debt looks like debentures, bonds, and notes. The team at Prospectus LLC has been writing PPM documents for more than 15 years, and we have been played a major role in thousands of successful private placements.

Types of Private Placement Memorandum

Private Placement Memoranda can come in many different forms. The type of offering and the type of security being issued will determine the structure and nature of the PPM. The two primary PPM documents, however, that are used across the globe are an equity private placement or a debt private placement.

Equity: For an offering based on equity, the company issuing the equity is basically selling ownership shares for capital. The most commonly used equity PPM is one that sells equity in the form of common stock or shares. Specifically, an LP or an LLC can sell units or limited partnership interests in the company. In some cases, to spur even more interest, the company can sell preferred stock which comes with more benefits.

Debt: For a debt offering, the company will sell debt securities such as debentures, bonds, or notes. In a debt PPM, the company will write about pertinent information such as the type of debt being sold, the interest rate, the maturity date and other relevant information. In a debt offering, a company may also issue convertible debt securities.

Rules: Just like any offering document, there are international and national rules/regulations that apply to every PPM. As an example, under Regulation D offerings, Rules 504, 505, and 506 must be adhered to. Individuals or companies can also issue offering documents under Regulation A (Reg A), Regulation S (Reg S), and Rule 144A. The most utilized rules in private placement for debt and equity are Reg S and 144A. If you need an equity or a debt PPM, the team at Prospectus LLC can help with any step in the process.

Why Write a PPM?

Why is a PPM so important? Why should a company have to write one just to raise capital from investors?

It is widely accepted that the business plan is the most important document for any business. A comprehensive, thorough, and well-written business plan can be a guide for any company. Although a business plan can never predict the future performance of a company, it still shows that the owners are professional and that they care about their own company which looks good to investors.

This is the same for the PPM. Writing a Private Placement Memorandum shows that you truly care about your company and that you want to see it grow.

Main Reasons for Writing a Private Placement Memorandum

  1. The PPM is drafted with the intention of adding protection to the company issuing the securities. It is also written to provide investors with key information such as the terms and conditions of the security. The PPM does this by including a business risk section. Mainly, the PPM is used by the investor to gather all possible information on the business and the market, so that he/she can make an educated decision about whether to invest or not. If all the possible risks are outlined in the memorandum, then the company will have protection if it goes bankrupt and investors seek some type of monetary compensation.
  2. The PPM is a professional document that presents your investment opportunity. Aside from the fact that many aspects of the PPM are mandatory under SEC regulations, the document itself proves to potential investors that the management team is credible and professional. A thorough, well-written PPM shows that the company issuing the securities is complying with standard procedure by providing the proper documentation in the form of the PPM.

What Prospectus LLC Can Do

The team at Prospectus LLC can help in the process of creating your Private Placement Memorandum. No matter the type of business, the market, or the jurisdiction, we have the experience necessary to help you create a comprehensive and professional PPM. This includes the drafting of memoranda for both offshore and onshore companies and funds. Also, we do specialize in the writing of PPM for special purpose vehicles in both Asia and Europe which have their own unique structures.

If you have any questions, or if you want to sign up for a free consultation, please don’t hesitate to contact us!

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