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Frequently Asked Questions

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What is a Private Placement or Offering Memorandum?

An Offering Memorandum, also known as a "Private Placement Memorandum or PPM" 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 Offering Memorandum includes enough information about your business for a potential investor to make a decision on whether or not they want meet with you.

The Offering Memorandum has the following main sections:

  • Executive Summary
  • Offering
  • Risk Factors
  • Company Description
  • Financials
  • Management
  • Description of Capital Stock
  • Investment Highlights

If you are not undertaking a formal offering and just want to present your business plan, the only sections you will need are the Executive Summary, Company Description, Financials and Management sections.