Creating a Private Placement Memorandum (PPM)

What Is a Private Placement Memorandum?

When securities are sold as “private” transactions because they fall under an exemption from federal and state law, Private Placement Memorandums (PPM) are typically used. Other terms for a PPM include offering document or offering memorandum.

The PPM itself is a legal document that is given to prospective investors, disclosing all relevant information related to the investment opportunity. It is not intended to be a persuasive document like a business plan might, but rather its purpose is to lay out all of the details regarding the investment, allowing the investor to determine for themselves if they want to move forward.

What Needs to Be Included in a PPM?

When drafting a PPM, you have to make sure that everything within the document is accurate. You cannot include any misleading information or make any false statements regarding the investment within the PPM, due to the anti-fraud provisions of the federal securities laws.

Items that should be written into a PPM include:

• All known risks associated with the investment
• Management information
• Information about the company’s history
• Description of products and services offered by the company
• A detailed account of how the investor’s money will be utilized
• The restrictions, rights, and class of securities
• And much more

Experienced investors will most likely expect a detailed Private Placement Memorandum with sufficient disclosures and legal information. In fact, they may look at the thoroughness of the PPM as a sign of the overall professionalism of the business.

Personalized Attention Focused on Meeting Your Business Needs

Whether you are looking for help in creating a strong PPM or you need assistance with any other legal business matter, look to our qualified Houston securities law firm. We can help you navigate the best path for you and your company.