The PPM, or Private Placement Memorandum, or Confidential Offering Memorandum, or Memo, is the document that lays out your company, its management, the investment scenario, risk disclosures, and most importantly includes an investment contract, or what is commonly known as a Subscription Agreement. It is the document that discloses information investors need to know to make an informed investment decision about a Regulation D Private Securities Offering.
Covering the entrepreneur (or “Issuer,” as in Issuer of securities) the PPM details the company and the investment opportunity. It disclaims legal liabilities and explains the risk of losses. Most importantly the PPM protects the entrepreneur from expensive litigation in the event the business doesn’t work out as planned and the investors lose money.
The PPM also protects Investors by disclosing the backgrounds of management, financial stability, risks and other details that may otherwise not be disclosed.
Key elements of the PPM are the ownership structure of the company, the investment structure, mandatory legal disclosures, management backgrounds, company operations, risk levels, use of proceeds, financial information, business plan, dilution, investor suitability, subscription agreement and more.