As your business grows, you’ll notice that many actions you and other shareholders can take involve a lot of paperwork. One action, such as selling stock or business security, entails various documents for what appears to be a simple transaction. There’s paperwork to detail the contents of the deal, what it means to hold stock in the company, and what this means for other shareholders. A private placement memorandum (PPM) is given to prospective investors when a shareholder or business is looking to sell stock.
Even before an entity agrees to buy or sell anything, a PPM is given to those considering investing. The PPM works to attract and convince outside entities to become investors, as it informs them of the company’s investment vehicle. This can resemble a thorough business plan.
A PPM is usually completed by a non-banking financial and law institution. Consider your accountants and attorneys. You need both to produce an accurate, thorough, and legally protective PPM that will bolster your company’s potential future of investments. The Nashville entrepreneurial law attorneys at Tressler & Associates can fill the legal role required to complete a PPM.
While a PPM needs to include useful information for potential investors, you need to ensure it isn’t giving away anything that only current shareholders should know. All security and share transactions are subject to federal securities laws, so it’s important to make sure that every state is true, honest, and not misleading. To make sure of this, a PPM needs to include:
Commonly mistaken for private placement memorandum, business plans are marketing documents that promote the business primarily to consumers. Investors can become interested in investing in your business after being exposed to a business plan, but they would still need a PPM.
PPMs are also not meant to be persuasive like a business plan is. PPMs and business plans should both disclose topics like marketing demand, customer profiles, growth opportunities, and competition, but not in the same way.
If your PPM isn’t factual and concrete as it breaks down all the external and internal risks your company faces, the PPM is not well-drafted, and borders on being a business plan. To assure that this doesn’t happen, you need a proper and experienced entrepreneurial law attorney to be a part of the writing process.
There’s too much that goes into a private placement memorandum to not have experienced lawyers involved in their creation. Should anything be missing or input incorrectly, your business may not only see the loss of a potential investor but trouble with state and federal courts.
With the legal representation of Tressler & Associates’ entrepreneurial law attorneys, your PPMs will be safe and secure to give to potential investors. Contact our Nashville law firm to assure your business’s future success.
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