A private placement memorandum (PPM) is the legal document private equity asset managers and capital raisers need to give prospective investors before they invest.
The PPM, required by Reg D (Regulation D) helps to protect you from liability – and provides copious detail on the nature of your investment, associated risks, fees, financials, management, legal structure, and ownership.
Reg D is a Securities and Exchange Commission (SEC) regulation that governs private placement exemptions. Reg D allows smaller companies to raise capital through the sale of equity or debt securities without having to register their securities with the SEC.
Do you need an attorney to prepare a PPM? If you have asked that question, you likely do indeed need a legal expert to guide you through the appropriate information required, the differences in federal and state requirements, and whether you should prepare a PPM for accredited investors or not.
The following infographic is from VerifyInvestor: