Private Placement Memorandum (PPM)
Draft a Regulation D-compliant PPM delivering full-and-fair disclosure with a defensible liability record.
Quick Start
Collect before drafting:
- Issuer profile — legal name, formation state/date, addresses, prior names/reorgs.
- Offering terms — security type, price/valuation, min/max raise, use of proceeds, timeline, escrow.
- Cap table — authorized/outstanding classes, options/warrants/convertibles, major holders.
- Financials — historical statements, burn, runway, audit status.
- Business materials — deck, plan, key contracts, IP, regulatory posture.
- Management bios — roles, tenure, relevant history.
- Compliance inputs — 506(b) vs 506(c), investor eligibility plan, blue sky scope.
Core Workflow
1. Determine Exemption
| Factor |
506(b) |
506(c) |
| General solicitation |
Prohibited |
Permitted |
| Investors |
Accredited + ≤35 sophisticated non-accredited |
Accredited only |
| Verification |
Reasonable belief |
Reasonable steps to verify |
| Disclosure |
Enhanced if non-accredited present |
Accredited-only package |
Record the exemption choice and its disclosure implications in the PPM.
2. Intake & Gap Log
Audit available documents against required inputs:
- Governing docs (charter, bylaws/operating agreement, investor rights, ROFR/co-sale)
- Security terms (dividend/interest, liquidation, conversion, voting, protective provisions)
- Material contracts (top customers/suppliers, IP licenses, debt)
- Litigation/regulatory (claims, investigations, sanctions)
- Financials (last 2–3 years or since inception; audited vs unaudited)
Track gaps in a single table:
| Section |
Missing Data |
Source |
Owner |
Deadline |
3. Cover Page + Legends
Required elements:
- Issuer name, security type, max amount, date
- Confidentiality legend — restrict distribution; require return/destroy
- Securities legend — not registered under the 1933 Act or state laws; offered under exemptions; no government approval
- Transfer restrictions — restricted securities; no public market; must hold indefinitely
4. Executive Summary
Structured fields: issuer identity and state, offering terms (security, valuation, min/max, closings, escrow), key investor rights (dividend, liquidation preference, conversion, voting), top 3–5 use-of-proceeds categories with percentages, 3–5 highest-impact risks, investor eligibility and verification approach.
5. Risk Factors
Minimum categories — each with bold heading and 2–5 sentences (what, why material, consequence):
- Financial/capital (losses, burn, dilution)
- Business/market (adoption, competition, market assumptions)
- Regulatory/compliance (licensing, investigations)
- Technology/IP (development risk, obsolescence, disputes)
- Key personnel (dependence, recruiting)
- Customer/supplier concentration
- Securities-specific (illiquidity, transfer limits, no dividends, management discretion)
6. Use of Proceeds
| Category |
Min Raise |
Max Raise |
Description |
| Product/Engineering |
$ |
$ |
Milestones, hires, infra |
| Sales/Marketing |
$ |
$ |
Channels, headcount |
| Working Capital |
$ |
$ |
Ops, inventory, receivables |
| Debt Repayment |
$ |
$ |
Lender, rate, maturity |
| Fees/Offering Costs |
$ |
$ |
Legal, accounting, escrow |
Include discretion disclaimer and conditional allocations if max not reached.
7. Business Description
Cover: company history/milestones, products/services and roadmap, market size and customer profile, competitive landscape, go-to-market, operations/supply chain, regulatory framework, intellectual property.
8. Management & Board
| Name |
Role |
Tenure |
Relevant Experience |
Education |
Equity/Comp |
9. Capitalization
Provide pre-offering cap table, post-offering cap table (min and max scenarios), fully diluted schedule, and notes on options/warrants/convertibles with conversion assumptions.
10. Securities Terms
Term-sheet format covering: dividends/interest, liquidation preference (multiple, participation, deemed liquidation events), conversion (ratio, adjustments, auto-triggers), voting/protective provisions, redemption, transfer restrictions (ROFR, co-sale, lock-ups, legends), registration rights, preemptive rights, information and board rights.
11. Distribution & Subscription
- Direct vs placement agent; fees
- Offering timeline, closings, escrow terms
- Form D filing within 15 days of first sale [VERIFY]
- State blue sky notice filings and timing [VERIFY]
- Subscription steps: (1) review PPM + exhibits → (2) execute subscription agreement + questionnaire → (3) accredited verification if 506(c) → (4) wire funds → (5) acceptance notice and issuance
12. Legal Matters & Disclaimers
Counsel and accountant identification, audit status disclaimer, forward-looking statements cautionary language, no-update obligation.
13. Investor Qualifications
- Accredited investor definition with current thresholds [VERIFY]
- Net worth test excludes primary residence [VERIFY]
- Sophistication and illiquidity warning
- Company discretion to reject subscriptions
Final QA Checklist
Pitfalls
- No puffery — neutral language only; no unsupported projections or absolute guarantees.
- Tailor risks — issuer-specific; never use generic boilerplate lists.
- Gap discipline — every missing item goes in the Gap Log; do not draft around holes.
- Blue sky variance — confirm state-specific notice filing requirements and deadlines.
- Mark uncertainties — tag any unconfirmed citations or thresholds with
[VERIFY].
1---2name: private-placement-memorandum3description: Drafts U.S. Regulation D Private Placement Memoranda (PPMs) with required legends, risk factors, capitalization, securities terms, and subscription procedures. Trigger when drafting a PPM, preparing a Reg D (506(b) or 506(c)) offering, building accredited-investor disclosure, or structuring private placement documents to minimize 10b-5 liability.4---56# Private Placement Memorandum (PPM)78Draft a Regulation D-compliant PPM delivering full-and-fair disclosure with a defensible liability record.910## Quick Start1112Collect before drafting:13141. **Issuer profile** — legal name, formation state/date, addresses, prior names/reorgs.152. **Offering terms** — security type, price/valuation, min/max raise, use of proceeds, timeline, escrow.163. **Cap table** — authorized/outstanding classes, options/warrants/convertibles, major holders.174. **Financials** — historical statements, burn, runway, audit status.185. **Business materials** — deck, plan, key contracts, IP, regulatory posture.196. **Management bios** — roles, tenure, relevant history.207. **Compliance inputs** — 506(b) vs 506(c), investor eligibility plan, blue sky scope.2122## Core Workflow2324### 1. Determine Exemption2526| Factor | 506(b) | 506(c) |27|---|---|---|28| General solicitation | Prohibited | Permitted |29| Investors | Accredited + ≤35 sophisticated non-accredited | Accredited only |30| Verification | Reasonable belief | Reasonable steps to verify |31| Disclosure | Enhanced if non-accredited present | Accredited-only package |3233Record the exemption choice and its disclosure implications in the PPM.3435### 2. Intake & Gap Log3637Audit available documents against required inputs:38- Governing docs (charter, bylaws/operating agreement, investor rights, ROFR/co-sale)39- Security terms (dividend/interest, liquidation, conversion, voting, protective provisions)40- Material contracts (top customers/suppliers, IP licenses, debt)41- Litigation/regulatory (claims, investigations, sanctions)42- Financials (last 2–3 years or since inception; audited vs unaudited)4344Track gaps in a single table:4546| Section | Missing Data | Source | Owner | Deadline |47|---|---|---|---|---|4849### 3. Cover Page + Legends5051Required elements:52- Issuer name, security type, max amount, date53- **Confidentiality legend** — restrict distribution; require return/destroy54- **Securities legend** — not registered under the 1933 Act or state laws; offered under exemptions; no government approval55- **Transfer restrictions** — restricted securities; no public market; must hold indefinitely5657### 4. Executive Summary5859Structured fields: issuer identity and state, offering terms (security, valuation, min/max, closings, escrow), key investor rights (dividend, liquidation preference, conversion, voting), top 3–5 use-of-proceeds categories with percentages, 3–5 highest-impact risks, investor eligibility and verification approach.6061### 5. Risk Factors6263Minimum categories — each with bold heading and 2–5 sentences (what, why material, consequence):64- Financial/capital (losses, burn, dilution)65- Business/market (adoption, competition, market assumptions)66- Regulatory/compliance (licensing, investigations)67- Technology/IP (development risk, obsolescence, disputes)68- Key personnel (dependence, recruiting)69- Customer/supplier concentration70- Securities-specific (illiquidity, transfer limits, no dividends, management discretion)7172### 6. Use of Proceeds7374| Category | Min Raise | Max Raise | Description |75|---|---|---|---|76| Product/Engineering | $ | $ | Milestones, hires, infra |77| Sales/Marketing | $ | $ | Channels, headcount |78| Working Capital | $ | $ | Ops, inventory, receivables |79| Debt Repayment | $ | $ | Lender, rate, maturity |80| Fees/Offering Costs | $ | $ | Legal, accounting, escrow |8182Include discretion disclaimer and conditional allocations if max not reached.8384### 7. Business Description8586Cover: company history/milestones, products/services and roadmap, market size and customer profile, competitive landscape, go-to-market, operations/supply chain, regulatory framework, intellectual property.8788### 8. Management & Board8990| Name | Role | Tenure | Relevant Experience | Education | Equity/Comp |91|---|---|---|---|---|---|9293### 9. Capitalization9495Provide pre-offering cap table, post-offering cap table (min and max scenarios), fully diluted schedule, and notes on options/warrants/convertibles with conversion assumptions.9697### 10. Securities Terms9899Term-sheet format covering: dividends/interest, liquidation preference (multiple, participation, deemed liquidation events), conversion (ratio, adjustments, auto-triggers), voting/protective provisions, redemption, transfer restrictions (ROFR, co-sale, lock-ups, legends), registration rights, preemptive rights, information and board rights.100101### 11. Distribution & Subscription102103- Direct vs placement agent; fees104- Offering timeline, closings, escrow terms105- Form D filing within 15 days of first sale [VERIFY]106- State blue sky notice filings and timing [VERIFY]107- Subscription steps: (1) review PPM + exhibits → (2) execute subscription agreement + questionnaire → (3) accredited verification if 506(c) → (4) wire funds → (5) acceptance notice and issuance108109### 12. Legal Matters & Disclaimers110111Counsel and accountant identification, audit status disclaimer, forward-looking statements cautionary language, no-update obligation.112113### 13. Investor Qualifications114115- Accredited investor definition with current thresholds [VERIFY]116- Net worth test excludes primary residence [VERIFY]117- Sophistication and illiquidity warning118- Company discretion to reject subscriptions119120## Final QA Checklist121122- [ ] Defined terms consistent throughout123- [ ] Numbers reconcile across all sections124- [ ] Risk factors match issuer-specific facts125- [ ] All three legends present and prominent126- [ ] No general solicitation language if 506(b)127- [ ] Exhibits attached and cross-referenced128- [ ] All `[VERIFY]` items confirmed against current law129130## Pitfalls131132- **No puffery** — neutral language only; no unsupported projections or absolute guarantees.133- **Tailor risks** — issuer-specific; never use generic boilerplate lists.134- **Gap discipline** — every missing item goes in the Gap Log; do not draft around holes.135- **Blue sky variance** — confirm state-specific notice filing requirements and deadlines.136- **Mark uncertainties** — tag any unconfirmed citations or thresholds with `[VERIFY]`.
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