On occasion, privately owned companies of all ages, start-ups to established, need to raise capital. Normally in such situations the company will prepare a PPM (Private Placement Memorandum).
A private placement, also known as an initial private offering is the issuance and sale of stock of a company to an institutional investor, accredited and/or non-accredited investor to procure financing and raise capital. The Offering Memorandum should outline the terms of the investment securities being offered non-publicly. The structure of the private placement somewhat resembles a business plan in both layout and detail, allowing a company the ability to raise capital through the sale of equity or debt securities compliant with the SEC’s Regulation D.
For virtually all entrepreneurs, the most efficient mechanism to procure equity financing under an exemption is through the use of Regulation D (Reg D), which is a limited offer and sale of their company’s stock, or securities, without registration under the Federal Securities Act of 1933.
PPM’s normally have the following categories:
• Company profile and history
• Funding desired and intended use
• Management
• Product/Service marketplace
•Uniqueness of Product or Service
• Competition
• Investor buy-out provisions
• Financial information, historical and projected
Prior to the Internet, the preparation of a PPM was a burdensome process. Now, there are numerous generic PPM documents available through the Net at a cost of a couple hundred dollars or less. Most are offered by law firms specializing in such documents.
It is suggested you confer with your law firm on the appropriate on-line PPM for your specific needs.
posted by Michael Lombardy, co-founder & director of C-Level Clone
C-Level Clone Blog 