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Private Placement Memorandum

Sample Private Placement Memorandum (PPM) For FREE
A Private Placement is an extremely complex document. The primary purpose of a PPM is to give the entrepreneur the opportunity to present all potential risks to the investor. The PPM protects the entrepreneur in the event that the investment goes sour! That's why it's so important that the private placement memorandum be accurate and complete.

An attorney MUST review your offering to assure it complies with all national and state regulations. The Private Placement below is meant as a starting point for groups or individuals who want to piece together a PPM themselves, save some money and then take it to the attorney for review. An attorney must review your PPM to assure compliance with your state's securities laws. Failure to do so could cause some serious problems down the road, especially when approaching an initial public offering!

This is a very detailed, 70+ page Private Placement Memorandum (PPM which includes a sample engagement letter, investment bank term sheet, due diligence checklist, sample private placement memorandum and the subscription agreement! Everything your company needs to issue stock in accordance with the Securities and Exchange Commission. Details the summary of the offering, financial data, industry overview, management, etc.

There are several ways in which companies approach the creation of a PPM.

  • Attorneys. Many firms simply retain an attorney to prepare the PPM. Once complete, the management team is responsible for soliciting and pitching potential new investors. The only fees incurred are those of the attorney and the time of the management team. Attorneys will charge from $5000 to $20000 for a full private placement. An attorney may be a good route for companies that already have a well established network of possible investors to pitch the investment opportunity.
  • Investment Banks. Other firms hire an intermediary (investment bank) to help with the capital raise. Hiring an intermediary can be tricky.. An entrepreneur will encounter all sorts of institutions offering all sorts of different promises to raise money for the start-up. The decisions and processes can be very confusing and time-consuming. For many start-ups a wrong decision will KILL the company. There are all sorts of negotiations involved when retaining an investment bank, and there many different types of investment banks. As the entrepreneur YOU must be at the top of your game or you will get the short end of the stick!
  • PPM Specialists. Firms specializing in this arena are often a hybrid cross between legal counsel and an investment bank

The PPM offered for sale below is a starting point for all entrepreneurs and management teams considering the possibility of raising capital via a Private Placement. The document was prepared by a highly reputable legal firm in conjunction with the efforts of management. This PPM successfully raised over $15 million from individuals and institutions over the course of the raise.

Included in this download:

  • Engagement Letter. Typically sent by the investment bank to the entrepreneur.  It contains much of the same stuff as in the term sheet, basically even a higher-level overview of the proposed terms.  Many times before a term sheet is kicked out by the investment bank, an engagement letter will be sent as a show of commitment and as initial introduction to the general terms that the investment banker is considering.

  • Investment Bank Term Sheet.  Commentary on the term sheet, the terms, and how to get an i-bank to consider taking you on as a client

  • Due Diligence Checklist that the i-banker will give to the management team during the preparation of the PPM.

  • Private Placement Memorandum (company name omitted) that raised $15 million from individuals and institutions

  • Subscription Agreement that accompanies the Private Placement and commentary on what is an "accredited investor."

These documents are designed for business owners who have a basic understanding of private placements.  It is presented only as a sample document for educational and reference purposes. In any private placement, it is important to retain legal counsel, and this document should in no way be used to substitute for such counsel.

Click here to download the PPM for FREE.

 

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