Many entrepreneurs choose to bypass private capital infusions due to the expensive legal fees involved in preparing these types of alternative financing arrangements. Private Placements require a lengthy memo called a Private Placement Memorandum (PPM). These Private Placement Memorandums are extremely expensive to design and develop, and often require the creator of these documents to lay out detailed investment return information, along with capitalization figures, dilution ratios, key-man insurance policies, and other material information which is required by rule of law.

To ease the financial burdens of preparing these documents entrepreneurs have the option of preparing the documents themselves. Using a PPM Template any business owner, or their counsel, can layout a complete Private Placement from front to back. PPM Templates are designed to act as a roadmap. They provide the basic disclosure sections, disclaimers, and guides to help keep the preparer on task.

5 Tips on Private Placement Memorandums & PPM Templates
1. Choose a template that matches your company’s legal structure, e.g., Corporation, LLC, LP, etc.;
2. Make sure you check the template for errors, even in the sections that are prefabricated;
3. Include your business plan in the PPM as an exhibit, but add major portions of the plan throughout the PPM;
4. Customize any portion of the PPM that seems boiler plate. Make the PPM completely original using your information;
5. Double check your return on investment to investors.

The best PPM Templates typically cost around $200. We have found at least one website that has excellent PPM Templates and charges roughly $200 for a membership fee which gives access to over 15 template layouts. The website is located at www.regdfast.com.

Some companies offer a PPM software product that allows the user to plug-in certain information which is then populated to each section. The software then compiles the PPM using general prefabricated data and intermingling it with new user data. Upon initial examination of this software the pitfalls are very apparent.

Pitfalls of PPM Software
1. PPM copyright issues;
2. Can’t edit other parts of the PPM, e.g., basic disclaimers, state legends, etc.;
3. Annual updates and fees on the software;
4. Limitations on operating systems, e.g., won’t run on a Mac;
5. Doesn’t export to MS Word.

Attorneys charge $7,000 and up to prepare a Private Placement Memorandum. Many attorneys use templates to customize PPM’s for their clients. Allowing entrepreneurs access to these templates just makes good business sense.