Monday, April 27, 2015

What is a Private Placement Memorandum?

I do not know how many times I have consulted a client and have mentioned they need a PPM and they respond "What is that?"

A PPM, short for a Private Placement Memorandum, also known as an Offering Memorandum; is a legal document stating the objectives, risks and terms of investment involved with a private placement. This includes items such as the financial statements, management biographies, detailed description of the business, etc. An offering memorandum serves to provide buyers with information on the offering and to protect the sellers from the liability associated with selling unregistered securities.

You can essentially think of the offering memorandum as a fancy business plan. In practice these are a formality to meet the requirements of securities regulators since most sophisticated investors perform their own extensive due diligence.

Offering memorandums are for private placements, while prospectuses are for publicly-traded issues.

The PPM also includes the subscription agreement which is the actual "sales contract" for the shares of stock being placed. This is the document that the investor will sign and send in with their investment capital.

Where do I get a Private Placement Memorandum?

Well professional consultants, lawyers and most venture capitalist have access to these documents.  They need to be tailor made for your offering and company.  (You can see my website where I offer these services).  If you are looking for a snap shot, here are a few templates of PPM's and Subscription Agreements:



---Hope this was helpful!
-Nick
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About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The MicroCapCompany.com a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on PushYourRank.com

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email CervitudeNetwork@gmail.com, If you would like to advertise on The Blog, click here. 

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