A private placement memorandum is a document similar to a prospectus that is used in public share issuance. A private placement offering is a non-public issuance of ownership in the company or a promise to pay in exchange for investors supporting the private company or individual entrepreneur. Regulated under the Securities Act of 1933, private placements are usually offered in the form of common, preferred shares, warrants and promissory notes. Private placement memorandums (PPM) are usually offered to small number of qualified investors, but can also be marketed to institutional investors such as banks, insurance companies or pension funds.

Basic Requirements
The initial pages of a PPM look very similar to what an investor might see in a prospectus. Generally PPMs include information about the company/entrepreneur, a summary of the securities that are being offered, whether the issue is a primary or secondary issue and the price per share. Other information included will discuss the unique risk factors associated with a PPM, and with the technology/product or business model that will benefit from the PPM.

"Eyes Only"
The PPM may not be reproduced, and the potential investors who have been invited to participate in the offering are not allowed to discuss any information about the company or entrepreneur that is not contained in the PPM. In this way, a PPM is very similar to "Eyes Only" memos used by various levels of government and the military.

The Professionals
More often than not, a PPM is drafted by a lawyer, but may also be drafted by an investment bank or a PPM specialist, who are hybrid between legal counsel and investment banks. PPM's are complex financial documents and should be prepared by the professionals who are familiar with this type of share issuance.