Private Placement Memorandum
Prospectus.com’s team assists companies through the global financial markets with writing a Private Placement Memorandum or PPM. While the prospectus may contain similar information as a PPM would, the private placement memorandum will most likely have differing rules and regulations, including the number of investors allowed to participate in the offering. A well written private placement memorandum can benefit the entrepreneur – the company issuing the securities – and bring added value for investors, as the PPM will allow them to make an educated decision about pursuing the business opportunity at hand. The private placement memorandum serves as a disclosure document, and similar a prospectus, will outline the risks of the business, the opportunities, tax considerations, payout structures, as well as elaborate on the securities being offered.
Debt PPM or Equity PPM?
A private placement memorandum is used to raise capital in the private placement markets, which is another way of saying raising money from private investors. A company may decide to issue debt or equity in return for an investor’s capital. When deciding what to offer investors, the company’s management team must ascertain the most suitable business strategy with a long-term view of the business’s needs.
Type of Debt for a Private Placement
Debt offerings typically come in one of several traits. The private placement memorandum will highlight the details of the offering, including debt instruments like:
- Bonds
- Notes
- Debentures
- Convertible Debt, such as convertible bonds or convertible bonds notes.
Included in debt structures are characteristics like the interest rate of the notes or bonds, the maturity date and other details.
Types of Equity for a Private Placement
An equity offering is when a company allocates securities to an investor who then will own some percentage or rights within the company. The PPM will detail the type of equity structure, which can be as diverse as some of the following popular securities:
- Common Shares/Stock
- Preferred Shares/Stock
- Warrants
Characteristics of a Private Placement Memorandum
A private placement memorandum will incorporate many aspects of the issuer’s business in order to put forward a compelling case to raise capital. Here are some features of a private placement memorandum. Note that there are some bullet points below that are not included in every PPM, while other features may be used only for debt issuance, or an equity offering. One should not assume that a PPM will have all of these points, and indeed below is only a snapshot of some of the features that we here at Prospectus.com incorporate into a private placement memorandum.
- Cover Page
- Table of Contents
- Jurisdictional Legends
- Country Legends
- Regulations, such as Reg D, 504, 505, 506, 144A, Reg S, Reg A
- The Terms of the Offering
- Business summary
- Note or bond information, interest rate, maturity
- Trust Indenture
- Operating Agreement
- Management Agreement
- Investor Suitability Standards
- Risk Factors
- Tax considerations
- Capitalization of the Company
- Use of Proceeds
- Dilution
- Management Team Biographies
- Subscription Agreement
- And many other features…
Cost of a Private Placement Memorandum -Flat Fee
Our team at Prospectus.com drafts private placement offering memorandum at some of the most competitive price points in the industry. Depending on the scope of the work, the length and time needed to create the PPM and any complexities, fees can start at a couple of thousand dollars and then goes higher. We always offer a flat fee service for writing the PPM.
How Long Does it Take to Write a Private Placement Memorandum
Writing a private placement memorandum can take several days to weeks, again depending on the scope of the work. However, our team at Prospetus.com is known to be one of the most efficient writing firms for PPM work worldwide, and indeed, if a company needs a PPM in a short amount of time – even 1 to 3 days – we can assist. We pride ourselves on being the most efficient writers and consultants at the lowest prices possible.
Feel free to contact us anytime for a free consultation for a private placement memorandum.
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