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Private Placement Memorandum FAQs

Private Placement Memorandum FAQs

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Published by jbennet33569
Private Placement Memorandum FAQs
Private Placement Memorandum FAQs

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Published by: jbennet33569 on Apr 27, 2013
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03/02/2014

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Private Placement Memorandum FAQs
A
, or PPM is a document that is provided to aprospective investors for the issuance of securities, which includes stocks, bonds andother investments defined as securities under the Securities law.The PPM is a document the primary purpose of which is to give the sponsor (the entityseeking to issue the security) the opportunity to present an investment opportunityand the potential risks involved to investors.While the PPM is required under Securities Laws for the protection of the investor, thePPM also provides protection to the sponsor of the transaction in the event that thetransaction goes south.It is for this reason that the sponsor will want to make sure that the PPM is completeand accurate.This is why I strongly urge all of my clients to have a qualified securities attorneyreview their offering documents for accuracy, completeness and compliance with stateand federal securities laws before hitting the streets.The PPM consists of information that is relevantfor an investor to make a prudent investmentdecision. This information will includeinformation about the Issuer (the entity that isactually issuing the security) including:* Disclosures and legends required under state and federal securities laws* The security being offered the terms of the offering* Company information and structure of the company* Risks related to both the company and the investment* Information on the Issuer's business, operations, industry and markets* Bios on the senior management* Company financial information, both historical and forecasted* Cap table and a sources & uses tableThe PPM will also include a subscription agreement, which is a document that i)includes the investor's certification of their status as an accredited investor, and ii) isthe purchase agreement for the security being offered.

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