Also referred to as an offering memorandum, a private placement memorandum is a legal document that investors receive before buying a security. The main purpose of a private placement memorandum is to highlight the terms of an investment along with any risks. This legal document also contains critical company details – a mission statement, financials, and a description of the management.
Our Fee:
$18,000 (50% upfront, balance on completion)
A private placement memorandum is key to raising capital for your business. Prospective investors receive the memorandums – not your current equity owners. Without the proper information to entice investors, you will not be able to raise sufficient capital. Qualified investors will perform their own due diligence on your company, so any discrepancies in the private placement memorandum can raise red flags.
Because private placement memorandums in the United States are legal documents, companies usually write them with the help of attorneys. Federal Form D fillings also accompany the private placement memorandum for companies that meet exemption requirements. Companies need to ensure that they comply with anti-fraud rules under Regulation D, or they could face strict fines or even prison time.
Our US securities lawyers are well-versed in SEC regulations, most notably Regulation D. The main purpose of Regulation D is to provide registration exemptions for qualified companies. This regulation is beneficial because it allows smaller companies to raise capital much faster. We work side-by-side with our clients so that they understand Rule 504, 505, and 506.
Under Regulation A, companies do not have to register their securities but are limited as to how much money they can raise. There are two tiers: 1 and 2. Tier 1 allows a company to raise $20 million within a year and tier 2 allows a company to raise $75 million within a year. Compared to Tier 1, Tier 2 limits the amount of money that companies can raise from non-accredited investors. Regulation A+ is simply an expansion of Regulation A that was created in 2015.
If a company sells less than $10 million in securities within a year, it can receive an exemption under Rule 504. However, the company still has to file a Form D with the SEC at least 15 days after the sale of the first security. Certain companies do not qualify for Rule 504 exemption, such as investment companies or companies with no clear purpose.
Our lawyers help our clients find alternatives to Rule 505, a rule that was phased out in 2016. This rule gave exemption to companies that sold $5 million in securities within a year. The caveat was that companies could only sell to 35 unaccredited investors but could sell to an unlimited amount of accredited investors.
Rule 506 is made up of part b and part c. Under Rule 506(b), companies are allowed to use general solicitation. Rule 506(c) allows solicitation to accredited investors. Rule 506 lets companies raise an unlimited amount of money but still mandates that companies file a Form D.
We have a team of US securities lawyers who have experience in a broad range of fields, ranging from investment banking to consumer technology products. Our attorneys can represent both startup companies and large corporations. Not only does our team know exactly what to include in a private placement memorandum, but they also understand complex securities laws. With the help of our lawyers, you can avoid potential lawsuits and violations of security laws.
Many US securities lawyers that create memorandums charge costly hourly fees. Here at Cambridge Corporate Finance, we charge a flat fee that is provided to you before we start our work. Our mission is to serve you with both honesty and transparency.
We charge a fixed rate of $18,000 to create your Private Placement Memorandum. Of the $18,000 fee, 50% is due in advance, and the remaining 50% is due upon delivery of the Private Placement Memorandum. With our fixed-rate pricing model, there are no surprises; you know exactly what you are going to pay before we begin the engagement. As a firm that strives to work with integrity and transparency, we believe that a fixed-fee contractual agreement is the best practice.
Banks and outside investors all require documented evidence proving your ideas will produce successful results. Strategic objectives, marketing and financial forecasts all need evaluating succinctly to aid decision-making.
To get an idea of how we can support your fundraising goals, download a sample valuation report created by Cambridge Corporate Finance.
Contact us today to get a professional business memorandum document. Our team of US securities lawyers can help create the perfect memorandum to attract investors from all different backgrounds.
Are you ready to secure capital funding and expand your business’s reach? Schedule a free consultation with us today. Our team is ready to evaluate your capital needs and create a tailored approach to help you succeed. No commitment is required to begin the conversation.
Let us do the hard work and watch
your business sprout.
+1(480) 555-0103
Cambridge Corporate Finance LLC
18 Brattle St
Suite 400
Cambridge, MA 02138
Cambridge Corporate Finance LLC
18 Brattle St
Suite 400
Cambridge, MA 02138
© All rights reserved by Cambridge Corporate Finance LLC. We are not a licensed broker dealer. We do not sell or solicit securities of any type. We have never received any compensation for securities sold in any capacity. Cambridge Corporate Finance LLC is not a law firm. Consult independent counsel for any and all legal advice and questions.