circulars, or private placement memorandums (PPM), are the quintessential document
used to raise equity in a private placement. Working very closely with seasoned
legal counsel, our staff prepares a thoroughly professional spiral-bound offering circular
with all the support documentation that will withstand SEC and other legal
A PPM is an extremely complex document. The primary purpose of a
PPM is to give the entrepreneur the opportunity to present all potential risks
to the investor. The PPM protects the entrepreneur in the event that the
investment goes sour! That's why it's so important that the private placement
memorandum be accurate and complete.
attorney must review your PPM to assure compliance with your state's securities
laws. Failure to do so could cause some serious problems down the road,
especially when approaching an initial public offering!
A PPM includes an engagement letter, investment bank term
sheet, due diligence checklist, and the
subscription agreement. This is everything your company needs to issue stock in
accordance with the Securities and Exchange Commission including details of
the offering, financial data, industry overview, management, etc.
There are several ways in which companies approach the creation
of a PPM.
- Attorneys. Many firms simply retain
an attorney to prepare the PPM. Once complete, the management team is
responsible for soliciting and pitching potential new investors. The only fees
incurred are those of the attorney and the time of the management team. An
attorney may be a good route for companies that already have a well established
network of possible investors to pitch the investment opportunity.
- Investment Banks. Other firms hire
an intermediary (investment bank) to help with the capital raise. A cautionary tale: Hiring an
intermediary can be tricky. An entrepreneur will encounter a variety of
institutions offering many different promises to raise money for the
start-up. The decisions and processes can be very confusing and time-consuming.
For many start-ups a wrong decision will kill the company. There can be complex negotiations involved when retaining an investment bank, and there many
different types of investment banks. As the entrepreneur, you must be at the top
of your game or you will get the short end of the stick! Cornerstone Financial solves this problem with a straight forward engagement letter written in plain English that sets forth our role in producing the PPM.
- PPM Specialists. Firms specializing
in this arena are often a hybrid cross between legal counsel and an investment
bank. Working closing with our seasoned legal counsel, Cornerstone Financial brings to the task the best of investment banking with razor sharp legal advice.
The PPMs produced by Cornerstone Financial are ideal for all
entrepreneurs and management teams considering the possibility of raising
capital via a Private Placement. Our documents are prepared by a highly
reputable law firm in conjunction with the efforts of our seasoned investment banking staff. We charge a competitive flat rate to prepare the document. Contact us today to get started!
"We make a living with what we get, but we make a life with what we give." Winston Churchill