The ISIN Network can assist your company with the writing or editing of your private placement memorandum or private prospectus.
Although more complex than this defection, a private placement is simply a private offer of securities in a non-public offering. Said another way, a ‘private placement’ is also known as an initial private offering via 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. An Offering Memorandum or Private Placement Memorandum or prospectus is given by the company to the investor. The OM or PPM details the terms of the offering, or the investment securities being offered (all non-publicly). The structure of the private placement and the very purpose of the document is to give the issuer or company the ability to raise capital through the sale of equity or debt securities compliant with the SEC’s Regulations.
The ISIN Network can assist in the writing and drafting of your Private Placement documents.
An essential key to a successful private placement raise, aside from the management team of the company, is the “PPM” or Private Placement Memorandum.
A Private Placement is a document that is used to raise private capital, either through the sale of debt, such as through a bond or promissory note, or via equity, such as stocks, shares, etc. A Private Placement may be compared to the document that is used for companies seeking to go public or have an initial public offering. In a public offering, the company seeking to issue the securities and raise capital issues a ‘prospectus.’ In a private offering one gives a Private Placement, or the private placement offering memorandum, as opposed to the public company which gives over what is termed the prospectus.
For a Private Placement to be considered proper or valid, aside from any SEC rules that must be complied with, the Private Placement document must list several key ingredients in order to attract investor interest. For instance, a Private Placement offering should include a well written business plan or executive summary, a detailed use of proceeds, a strong and clear term sheet, management biographies, and of course real related risk factors that could potentially harm the business. There are many more important features, but this is just a broad stroke of what the ‘meat’ of the document should entail.
There are typically two parties that hand over a private placement memorandum offering to investors. The first is typically directors of the company itself. Those seeking capital are the logical choice to seek out investors. Secondarily, and sometimes being the primary source of finding capital, are brokers or broker dealers. Broker dealers are the ones that have a network of investors already as clients. They can place one’s Private Placement with investors much faster – usually – than a director of a company, unless that director is of course well connected. Brokers typically get paid a percentage of the sale proceeds of the offering.
The short answer is yes. Writing a Private Placement is a fundamental obligation of the company seeking to raise capital. Not only is it needed to comply with SEC rules and accepting capital from investors, but a Private Placement memorandum a) looks highly professional to investors, as it shows one is serious about compliance, and b) the Private Placement acts somewhat of a buffer between those who personally accept investment capital and the investors, particularly if the company fails or loses the investors’ money. The risk factor section of a Private Placement should detail all the real risks of the company so that, in case the company fails, the investors cannot demand their money back as they were adequately warned. ISIN Network’s Consultants, or attorneys, lawyers, securities attorneys, and much more draft and write private placement memorandums for all types of business. ISIN Network is a world leader in offering memorandum writing.