| ign="center"> | | | | investors to believe in your business ideas and for |
| There are numerous legal concerns in the creation of | | | | you to raise the capital. They wonât be able |
| a private placement memorandum (PPM) and it is | | | | to comment with expertise on your business |
| definitely recommended that a lawyer review the | | | | strategy and your techniques as a salesperson and |
| document at some point. However, there are both | | | | presenter. |
| pros and cons to retaining a lawyerâs | | | | Con: Payment Up Front |
| services to draft the entire document in the first | | | | Furthermore, lawyers will require payment for the |
| place. | | | | PPM at the time it is created, well before capital has |
| Pro: Deep Legal Expertise | | | | been raised. This payment can be anywhere from |
| Assuming you have chosen a lawyer well (remember, | | | | $50,000 to $200,000 or more and it can take six to |
| not all lawyers are perfect) you will get correct | | | | twelve months to raise money from a private |
| advice on how to meet both federal and state | | | | placement. The cash paid out for a lawyer to draft |
| regulations, while reducing your businessâs | | | | the PPM may be sorely missed during this time. |
| legal liability in a private placement offering. The | | | | Con: Need for Separate Brokerage Services |
| lawyer should be able to relate every aspect of the | | | | To carefully and legally sell your shares to private |
| document to these needs, making sure that no | | | | investors and institutions, your company will have to |
| misleading words or disclosures are made which can | | | | raise funds itself or have to contract a licensed |
| increase the chance of fraud claims down the road. | | | | broker-dealer after the PPM is finished. By using a |
| Con: Business Expertise | | | | broker whose firm can write the PPM as well (with |
| However, while the lawyer is busy crafting the PPM | | | | legal review) you can save a great deal of money |
| to protect your legal interests, they are not tending | | | | and ensure that the document is written by a |
| to the business requirements of the document. They | | | | long-term partner whose financial success is tied to |
| will not be able to say how likely it will be for | | | | yours. |