| I feel like I have to put this out there as a corporate | | | | and small private equity firms who want to be in and |
| strategies consultant with a firm that is completely | | | | out of a transaction will typically want to buy low and |
| submerged in the industry of authoring business | | | | sell high and will typically want to invest in companies |
| plans, private placement memorandums (regulation d | | | | that are going public in as short of a time as possible. |
| rule 504, 505 and 506), facilitating direct public | | | | The investors in pre public companies and other |
| offerings to our database of investors and taking | | | | 'angel' type investors have a minimal bankroll of $1m |
| companies public on the OTCBB. | | | | or less (usually) so they have to be in and out of a |
| When I get calls about private placement | | | | transaction fast, thus the need for a 'selling |
| memorandums it is typically one of two scenarios: 1. | | | | shareholder offering'. This is a mandatory prerequisite |
| They want to raise capital and they are shopping | | | | for a company that wants to raise capital from |
| around for the cheapest PPM author they can find. 2. | | | | angels and go public. With a selling shareholder |
| They have made the mistake of using the cheapest | | | | offering you are setting up a scenario that ever |
| PPM author they could find and now they can't find | | | | investor dreams of. |
| an investor that will fund their 70 page stack of toilet | | | | You are giving them the ability to buy deeply |
| paper. | | | | discounted stock and 3 or 4 months later, when the |
| It never ceases to amaze me when companies are | | | | company goes public, they can sell their stock into |
| trying to convince investors that they are ready for | | | | the market at an offering price that is typically 4 or 5 |
| that next step in their corporate evolution, yet they | | | | times what they originally purchased the shares at |
| are being penny wise and dollar foolish with the most | | | | and the company is happy because the investor |
| technical document their company has ever had done. | | | | created a bridge for the company to go public and |
| And why do people put the cart before the horse? I | | | | then created a public float. |
| mean, why do people write the private placement | | | | Now, after reading this, you will see why writing a |
| memo before they know who their audience is? As a | | | | PPM before you know who your audience is and |
| rule of thumb you should write for your audience. | | | | before you've contracted with a consulting firm is a |
| A ppm that is being written for venture capital firms | | | | critical mistake. Find a consulting firm that is well |
| will demonstrate and cater to more of an equity | | | | rounded as a capital raising facilitator and have them |
| control and technical audience whereas a ppm that is | | | | help you set a goal as an end result and then build |
| being written for angel investors, private investors | | | | your strategy from there. |