ContractsCounsel Logo

Private Placement Memorandum Review

September 21, 2023
Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 8,658 reviews
Home Blog Private Placement Memorandum Review

Jump to Section

Need help with a legal contract?

Post Project Now

A private placement memorandum, sometimes abbreviated to “PPM”, is a legal document used by companies to fundraise or obtain investment funds. Private placement is a way for companies to raise money by selling securities to a small number of investors. The PPM provides potential investors with detailed information about the investment like the company's business plan, financial statements, risks, and outlines the terms of the investment.

How Do You Evaluate a Private Placement Memorandum?

PPMs are crucial for compliance with securities regulations, helping investors make informed decisions, and protecting issuers from legal liabilities. For these reasons, private placement memorandums must be carefully evaluated and reviewed.

To review a private placement memorandum, follow these steps:

  1. Understand the purpose. Before reviewing a PPM, it is important to understand the purpose of the PPM. This document should disclose all important information about the investment and the company to the investor.
  2. Carefully read the entire document. Be sure to read the entire PPM including the executive summary which will familiarize the investor with the company’s purpose and business structure.
  3. Consider the risk factors. Before making an investment, the investor should understand any potential risks associated with the investment.
  4. Double check financial terms. Be sure to analyze any sections of the document that outline financial information and the financial terms of the investment. The document should accurately reflect the agreement made between the company and the investor.
  5. Seek legal guidance. Consider hiring an attorney who is familiar with investments and private placement to review the memorandum.

While it is possible to review your own private placement memorandum, it is always encouraged to seek the help of an experienced attorney. An attorney can evaluate the PPM for substantial risks and ensure that the document complies with all applicable securities laws.

See Private Placement Memorandum Pricing by State

What Must Be Included in a Private Placement Memorandum?

A comprehensive private placement memorandum will include following sections:

  • Cover page. The cover page should include the title of the PPM, the company name and contact information, and the date of issuance.
  • Executive summary. An overview of the investment opportunity including key points like the company’s background, the nature of the investment, and its potential returns.
  • Company overview. A detailed description of the business, history, and purpose. This section also outlines the company's industry, competitors, and market position.
  • Use of proceeds. How the investment funds will be utilized whether it's for expanding operations, paying off debts, or other purposes.
  • Financial information. Company financial statements to inform investors about the company’s financial health. This section should include balance sheets, income statements, and cash flow statements.
  • Risk factors. Potential risks associated with the investment which can include market volatility, competition, regulatory changes, and operational risks.
  • Management team. Detailed profiles of key company executives including each person’s qualifications and track records.
  • Terms of the offering. A clear outline of the terms of the investment, including the type of security being offered, the price per unit, minimum investment requirements, and any associated fees or expenses.
  • Legal and regulatory compliance. A PPM must comply with securities laws and regulations. This section outlines the legal framework governing the offering and any legal opinions or disclosures related to the investment.
  • Subscription agreement. The document investors sign to indicate their interest in participating in the offering which includes terms and conditions, representations, and warranties.
  • Confidentiality and non-disclosure. Clauses related to confidentiality and non-disclosure to prevent potential investors from sharing sensitive company information.

A private placement memorandum may include additional sections and attachments to provide full details and disclosures to investors. If you are unsure what needs to be included in a PPM, always consult with a lawyer who has experience drafting and reviewing private placement memorandums.

Meet some lawyers on our platform

Bryan B.

210 projects on CC
View Profile

Michael A.

7 projects on CC
View Profile

Scott S.

50 projects on CC
View Profile

Ryenne S.

500 projects on CC
View Profile

What is the Purpose of a Private Placement Memorandum?

The purpose of a private placement memorandum is to provide potential investors with a comprehensive disclosure of crucial company and offering information prior to making an investment. A PPM is used to protect both the issuing company and the investors by outlining the terms of the investment opportunity, including financial details, risks, management team qualifications, and regulatory compliance.

A private placement memorandum assists investors in making informed decisions about participating in the offering. This legal document ensures that they understand the associated risks and rewards of the investment. In addition, a PPM safeguards the company from potential legal issues by providing transparency and showing adherence to securities laws and regulations.

Are Private Placement Memorandums Necessary?

Yes. Typically, private placement memorandums are necessary to protect both the company and the investor during fundraising. However, the necessity of a PPM ultimately depends on the circumstances of the investment and the legal requirements in your jurisdiction.

When deciding if you need a PPM, consider the following factors:

  • Whether your jurisdiction legally requires a private placement memorandum for a company to issue securities to a private investor.
  • Certain investors will expect a PPM when considering a private investment and providing this legal document can increase company credibility and trust.
  • A PPM will help mitigate legal risks for issuers by ensuring full disclosure of information.
  • Failing to provide a private placement memorandum could expose the company to legal liabilities if investors feel they were not adequately informed.
  • A PPM demonstrates transparency and commitment to providing investors with comprehensive information.

Even if your jurisdiction does not require a private placement memorandum, this legal document provides benefits to both the issuer and investor. A well drafted PPM can help facilitate a transparent and successful business relationship.

Should I Hire an Attorney to Review My Private Placement Memorandum?

Yes. It is strongly encouraged to hire an attorney to review a private placement memorandum before agreeing to invest in a company. Hiring an attorney to review this important legal document will provide the following benefits:

  1. A lawyer will ensure that the PPM is in full compliance with the applicable securities laws which will reduce the risk of legal complications.
  2. Your attorney can review the memorandum for potential legal risks and liabilities. Your lawyer will help you assess and address these risks and protect your interests.
  3. Every private placement is unique, and an attorney can tailor the PPM to your specific needs and objectives, ensuring it accurately reflects your offering and mitigates potential risks.
  4. Having an attorney involved in the investment process can instill confidence in potential investors.
  5. In the event of a dispute, an attorney can facilitate smoother dispute resolution processes through mediation or negotiation.
  6. An attorney can help you stay up to date with regulatory changes and make necessary updates to your PPM as securities law changes.

Hiring an attorney to review and assist with the preparation of your private placement memorandum is an important step in the fundraising process. A lawyer who provides document review services will ensure your PPM is in legal compliance with all applicable securities law, protects your interests, and enhances investor confidence.

Get Help with Hiring an Attorney

Do you need help with a private placement memorandum? If so, post a project in ContractsCounsel's marketplace to receive bids from lawyers who are licensed to practice law in your state and can handle your project. All lawyers on the ContractsCounsel's platform are vetted by our team to make sure you are provided with top-tier service.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

Brad H. on ContractsCounsel
View Brad
5.0 (6)
Member Since:
November 6, 2020

Brad H.

Free Consultation
Raleigh, NC
11 Yrs Experience
Licensed in NC
University of North Carolina

Brad is a business attorney with experience helping startup and growing companies in a variety of industries. He has served as general counsel for innovative companies and has developed a broad knowledge base that allows for a complete understanding of business needs.

Jeremiah C. on ContractsCounsel
View Jeremiah
5.0 (32)
Member Since:
March 5, 2021

Jeremiah C.

Partner/Attorney at Law
Free Consultation
15 Yrs Experience
Licensed in NV, TX
Thomas Jefferson

Creative, results driven business & technology executive with 24 years of experience (15+ as a business/corporate lawyer). A problem solver with a passion for business, technology, and law. I bring a thorough understanding of the intersection of the law and business needs to any endeavor, having founded multiple startups myself with successful exits. I provide professional business and legal consulting. Throughout my career I've represented a number large corporations (including some of the top Fortune 500 companies) but the vast majority of my clients these days are startups and small businesses. Having represented hundreds of successful crowdfunded startups, I'm one of the most well known attorneys for startups seeking CF funds. I hold a Juris Doctor degree with a focus on Business/Corporate Law, a Master of Business Administration degree in Entrepreneurship, A Master of Education degree and dual Bachelor of Science degrees. I look forward to working with any parties that have a need for my skill sets.

Samuel R. on ContractsCounsel
View Samuel
5.0 (29)
Member Since:
October 2, 2021

Samuel R.

Free Consultation
Phoenix - Arizona
4 Yrs Experience
Licensed in AZ, PA, UT
Widener University Delaware Law School

My career interests are to practice Transactional Corporate Law, including Business Start Up, and Mergers and Acquisitions, as well as Real Estate Law, Estate Planning Law, Tax, and Intellectual Property Law. I am currently licensed in Arizona, Pennsylvania and Utah, after having moved to Phoenix from Philadelphia in September 2019. I am currently General Counsel for a bioengineering company. I handle everything from their Mergers & Acquisitions, Private Placement Memorandums, and Corporate Structures to Intellectual Property Assignments, to Employment Law and Beach of Contract settlements. Responsibilities include writing and executing agreements, drafting court pleadings, court appearances, mergers and acquisitions, transactional documents, managing outside expert legal counsel, legal research and anticipating unique legal issues that could impact the Company. Conducted an acquisition of an entire line of intellectual property from a competitor. In regards to other clients, I am primarily focused on transactional law for clients in a variety of industries including, but not limited to, real estate investment, property management, and e-commerce. Work is primarily centered around entity formation and corporate structure, corporate governance agreements, PPMs, opportunity zone tax incentives, employee retention credits, and all kinds of business to business agreements. I have also recently gained experience with Estate Planning law, drafting numerous Estate Planning documents for people such as Wills, Powers of Attorney, Healthcare Directives, and Trusts. I was selected to the 2024 Super Lawyers Southwest Rising Stars list. Each year no more than 2.5% of the attorneys in Arizona and New Mexico are selected to the Rising Stars. I am looking to further gain legal experience in these fields of law as well as expand my legal experience assisting business start ups, mergers and acquisitions and also trademark registration and licensing.

Elizabeth A. on ContractsCounsel
View Elizabeth
4.7 (1)
Member Since:
October 2, 2023

Elizabeth A.

Free Consultation
Phoenix, Arizona
12 Yrs Experience
Licensed in AZ
Pepperdine University School of Law

I represent business and consumer clients to help them address the range of legal issues that concern them including business contractual disputes, debt litigation, and related matters.

Brittany B. on ContractsCounsel
View Brittany
Member Since:
October 1, 2023

Brittany B.

Free Consultation
Upton, Massachusetts
11 Yrs Experience
Licensed in MA, VT, WI
University of St. Thomas

I am a tax attorney with years of experience as in house counsel at an accounting firm. I have also done tax litigation and audit representation. I work with for profits and non profits.

Lynette P. on ContractsCounsel
View Lynette
Member Since:
October 1, 2023

Lynette P.

Litigation Attorney
Free Consultation
Little Rock, Arkansas
10 Yrs Experience
Licensed in AR, TX
St. Mary's University School of Law

I am licensed in both Texas and Arkansas but actively working in Arkansas. My primary focus is criminal defense, family law, and estate planning (wills and trusts).

Matthew W. on ContractsCounsel
View Matthew
Member Since:
October 2, 2023

Matthew W.

Corporate Lawyer
Free Consultation
15 Yrs Experience
Licensed in TX
University of Texas Law School

I represent startups, investment firms, and individuals frequently with equity and debt financing, M&A transactions, and commercial contracts.

Find the best lawyer for your project

Browse Lawyers Now
Learn About Contracts
See More Contracts
other helpful articles

Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.

View Trustpilot Review

Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.

View Trustpilot Review

I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.

View Trustpilot Review

I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.

View Trustpilot Review

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer


Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city