Why Private Placement Memorandums Are Crucial?
After initial funding, registration, exemption and finding investors for further funding, it is almost always necessary to compile a private placement memorandum (PPM).
The purpose of the PPM is two-fold:
- To sell an investor the plan
- To define the terms of the investment
While some entrepreneurs overlook this critical document, it is absolutely crucial to disclose all information regarding transactions and business, including the model, plan, finances and future fundraising plans. This is a protective measure that protects against exposure of an investor suing for fraud or misrepresentation, should something unexpected happen during the life of the business. Additionally, it discloses all terms of paybacks, limited partner rights, defines the shareholders and owner(s) and the company type.
Drafting this documentation is critical for successful business people, but it is a noncore process. Further, it is vital to ensure that all issues are properly documented. Make sure you work with an experienced attorney throughout this process.
Experience That Is Needed To Get Results
As a business plan attorney with a master’s degree in business administration, attorney Craig Lerman at Lerman Law Associates, P.C., understands the legal, economic and logistical challenges companies face. He is prepared to bring his years of experience to help you address any PPM issue, including:
- Security compliance and SEC issues
- Risk disclosure
- Security exemptions
- Investment terms
He will work directly with you to understand your unique business objectives and develop a solution suited to your long-term operational stability and success.