Offering Memorandum or Private Placement Memorandum (PPM) is a legal document that states the relevant information about financial transactions of a company. The importance of maintaining a record of each financial transaction your company undertakes cannot be emphasized enough. It is this factor that will entitle you to receive timely payments or products from your customers and other organizational units.

The purpose of an Offering Memorandum revolves around divulging everything the investor might need to know in order to take an informed investment decision. After this first procedure is complete, the investor will wire over the capital to invest. The Offering Memorandum:

• Details the investment opportunity
• Disclaims legal liabilities
• Elucidates the risk of losses

The idea of offering a Memorandum is not to sell or promote a product but to clearly outline the realities of investing – profits, but most importantly, losses.

The Offering Memorandum has to include sufficient information about your business so that venture capitalists can arrive to a decision about whether or not they want to deal with you. To develop an Offering Memorandum, a company would require:

• Business plan
• Financial statement
• Management team bios
• Stock or Ownership Records
• Intellectual Property (if any)

An Offering Memorandum has to comprise the following sections:

Executive summary: This must summarize your business objectives, your products/solutions, the market demand for your products and how you plan to deal with the market to earn revenue.

Offering: This should elaborate on the amount of capital you plan to raise. Mentioning the price information will not be necessary as the potential investor will suggest an estimate. The investor might also ask for the Current Capitalization Structure as well as the use of proceeds.

Risks factors: This is crucial. You must include the risk factors as much for your investors as for your own protection. It is recommended that you should take the aid of an attorney to review or draw up this section.

Capital stock description: This section must include the types of securities which are in your capital structure as well as the kinds of rights the existing investors exercise. If you have not decided on a valuation prior to presenting this, you must not include a post-offering analysis of the capital structure. This analysis would wholly depend upon valuation.

Investment highlights: This segment would help prospective investors understand the value of your business and why it would prove to be a good investment. Extol your business, highlight your strengths and emphasize on the techniques your management team would employ to generate revenues.

In addition to this you need to provide:

• Company comprehensive description of business
• Management biographies
• Income statement, balance sheet
• Investor sustainability data

Through presenting comprehensive Offering Memorandums to your investors, you display your level of professionalism, in the process, your company value. The presentation of this Memorandum will determine the investor’s decision about making an investment or not. Your edge lies in:

• Providing all relevant data that would help the venture capitalist in making an accurate investment decision.
• Exhibiting the data in a way that the document just does not seem ‘pessimistic-realistic’.
• Attach corresponding documents such as, a PowerPoint presentation,financial statement and articles of incorporation (AIC) to make the presentation interesting.
• Settling for accurate pricing.

An Offering Memorandum remains the core of any investment made or contract signed by your company. In the words of Dean Acheson, the 51^st US Secretary of State, “A memorandum is not written to inform the reader but to protect the writer.” The PPM acts as:

• a proof of decision making
• an aid for the decision-maker to take better judgments in similar scenarios

Global-Ability offers a detailed, competitive insight into the discreet and strategic technique of presenting Offering Memorandums for our clients. Our researchers, understanding the significance of quality and accuracy, go the extra mile in thoroughly studying and analyzing your company before preparing the Memorandum. From documenting capital plan to elucidating risk factors, to highlighting management bios, our Memorandum creating initiatives assimilate the industry’s finest practices and methodologies.