Private placement memoranda help to get financing for companies on the verge of the next big thing. Unfortunately, businesses in need of money often try to cut corners. Don't consider skimping on the legal side of things. If you have to ask why, read this list of three reasons to spend big on PPM:
Save Yourself from Prison
Jail time is a very real concern for mismanaging investments. PPM tell investors exactly how money is going to be used, what factors have made an impact in past projects and how you plan to do things differently than competitors. The private placement memorandum you provide will make or break your deal, but if you wind up losing money, your PPM will be the focus of an intense investigation.
Not only can you be fined for misrepresenting yourself or your business but falling away from your plans. If investigators feel you fudged or purposefully misstated things for the sake of obtaining financing, you really could wind up in prison. You've heard of the woman scorned? She's not too far off from the investor. Having a qualified firm create an air-tight PPM protects you and your future assets.
Private Placement Memoranda Support Your Success
A PPM isn't just some rambling letter explaining why you want or deserve financial backing. While writing it, you are forced to analyze your strengths, weaknesses, failures and successes. Not only that, you have to go the extra mile and figure out why those results happened.
In all this research for the sake of securing financing, you learn an immense amount about your business. Looking at figures, timelines, attempts and results provides you with a framework for succeeding again and again. A template from a private placement memoranda mill won't force you to get that insight.
PPMs Shine a Light on Management
A major focus of your proposal centers on your management team. Who is in charge of investments? How have they performed in the past? What are the strengths and weaknesses of your team? What are they likely to do or not do for you?
Like the general workings of your business, having intimate knowledge of your management team allows you to fine-tune your business. After careful consideration, you may decide that changes in management need to be made. Alternatively, you might decide you can't afford to lose them and budget more for their salaries.
Businesses that hire qualified legal teams to craft their private placement memoranda wind up learning far more than what they need to pay the bills. They learn how to protect themselves in times they need it most. They learn how to improve their business practices and their management teams for future success. Securing financing is important, but the benefits from hiring a good lawyer for a PPM will affect you throughout the life of your business.