Break your Memorandum of Private Placement into sections and make your drafting sessions easier. There are several sections in your Private Placement Memorandum that will be included. The general topics include a security disclosure, a transaction summary, transaction risks, business description, how to participate in the transaction.
The key to writing your private placement memorandum is first and foremost to be honest, and secondly to tell you not to sell (save your selling for the presentation of your power point). State and federal securities laws are most concerned with protecting the investor, so do not commit commission lies or omission lies.
Put yourself in the prospective investor’s shoes. If you were on the table side, what kind of information would you like to see and have? One of balancing the amount of information will be the challenge. The trick is to present the information in a clear and concise way that can be easily understood without cutting corners, but also without diving into too much detail.
The scope of the required disclosure would depend on a number of factors, including the size of the offer, and whether you offer the investment to non-accredited investors. Try to err on the cautionary side-not having enough disclosures may risk infringing securities laws, but over-disclosure does not cause any harm.
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