PPM Preparation and Review Services

We are a securities law firm providing flat-fee private placement memoranda (PPM) preparation services. Our securities attorney worked with a boutique securities and commodities firm in Chicago, where he assisted high profile clients in raising capital through Regulation D private placements for well-known market participants.  May Law, PC provides Reg D private placement legal services of the highest quality at cost-effective and predictable flat fees.  We serve clients across the country and internationally.

Experienced Securities Attorney

Our experienced securities attorney will work directly with your company through one-on-one consultations at each stage of the private placement offering process and will be available to answer questions that arise. Before preparing the offering documents, the attorney will review your company’s existing organizational documents and legal agreements and will assist you in identifying legal issues specific to your organization and offering structure. A private placement securities offering entails significant financial and regulatory risk, and requires the services of an experienced, licensed lawyer to advise you on issues unique to your offering structure and to help your company navigate the rapidly evolving securities laws and SEC regulations. Importantly, unlike unlicensed non-attorneys, we stand behind our work!

 

Our Private Offering Structuring and Preparation Process

Our flat-fee engagement includes comprehensive offering structuring and private placement document preparation.  The private placement process is broken down into the following five parts that can typically be completed within three (3) to six (6) weeks, depending on your organization’s ability to respond to the attorney’s information and document requests.

A) Review of Organizational Documents and Agreements

Before preparing the offering materials, the attorney will briefly review the company’s organizational documents and certain legal agreements to determine whether the offering is authorized.  Often loan documents, articles, bylaws, LLC operating agreements, etc., must be amended to allow the contemplated securities issuance. Among the documents that we would review include the following:

      • articles, bylaws, LLC operating agreements, etc. (to ensure that the offering is authorized by the offering documents and whether the offering  documents need to be amended);
      • agreements with third parties in which the company  is a party, (including employment, management or benefits agreements, customer and supply agreements, option plans, profits interest agreements, member, shareholder or partner agreements, leases);
      • offering documents from of any prior public or private debt or equities securities offerings made by the company; and
      • non-security debt agreements.

B) Preparation of Company Resolutions

Prior to making a securities offering, the company must prepare documents to authorize the offering and adopt the private placement documents. This is done through a written consent or resolution. Depending on the structure of your entity and the terms of the organizational documents, the authorization may be needed from: members, shareholders, managers, directors, or officers. After reviewing the organizational documents, we will prepare the necessary consents authorizing the issuance of the securities.

C) Information Procurement Phase

The attorney will ask your organization to respond to a detailed information request document that the attorney will prepare based on the initial document review.   The request will ask for written summaries of certain company information (much of which would be contained in a detailed business plan) as well as additional documents and records. The document will include items such as the following:

      • anticipated capital expenditures, anticipated short and long term growth, dividend policies;
      • competitive strengths, position in the marketplace, advertising and distribution channels;
      • available financial statements;
      • regulatory investigations or incitements against your company or management;
      • management bios, organizational chart, compensation structure;
      • operating history, capital structure, outstanding debt; and
      • risks particular to your company, pending or threatened litigation.

D) Structuring the Offering

In the next phase, the attorney will consult with your company on the offering structure and key terms of the offering. With your input, the attorney will prepare a term sheet outlining the principal terms of the offering transaction, including:

      • the class of shares or interest offered (preferred, participating, liquidation preferences, etc.);
      • the Regulation D exemption relied upon;
      • the number of total authorized shares or units offered;
      • the minimum investment amount per investor;
      • the minimum overall offering amount;
      • the price of the shares or amount of promissory notes; and
      • investor rights, including conversion and transferability rights.

E) Offering Document Preparation

Once your company has responded to the requested information and has signed off on the term sheet, the attorney will prepare the offering documents. The offering documents include three (3) documents: (i) a, private placement memorandum (PPM), sometimes referred to as a private offering memorandum; (ii) a subscription agreement; (iii) an investor suitability questionnaire; and for debt offerings only, a promissory note. During the document preparation phase, the attorney will work closely with you to obtain the necessary information to develop the appropriate disclosures. During this phase, it is important that your company be responsive to the attorney’s requests for additional information to avoid delays.

      • Private Placement Memorandum (“PPM”)

In order to satisfy the regulatory requirements and protect against liability, we draft disclosures, conflicts of interest and risk factors unique to your company, your industry, and your specific offering terms. Offering securities with a non-attorney drafted PPM or using one-size-fits all template adaptation poses serious regulatory and litigation risk.

      • Subscription Agreement

The subscription agreement is the purchase agreement executed by the investor and returned to your organization.

      • Suitability Questionnaire for Investors

The Suitability Questionnaire (which is attached to the subscription agreement) for investors establishes that the investor meets the required sophistication and accreditation status required by the Regulation D offering. The Questionnaire provides full disclosure to the company regarding the investor’s financial status, and that a loss of their investment will not jeopardize their financial security.

      • Promissory Note (Debt only)

For a debt offering, your organization will also need a promissory note, setting forth the terms of the loan between your organization and the investor.

SEC Form D and State Law Filings a/k/a “Blue Sky” Filings

Once the offering documents are prepared, the final step is for our firm to assist you with compliance with the federal and state notice filing requirements under Regulation D of the Securities Act of 1933.

  • SEC Form D

Form D is a federal notice of an exempt securities offering and is the only filing document that is required to be filed with the SEC. This 11 page form details information about the offering, the company, use of proceeds, and the principals of the company. Form D is not approved or reviewed by the SEC, but is a required notification document, and must be filed within 15 days of the first sale to investors and if the offering is ongoing, Form D must be filed again in one year. We offer preparation of the SEC Form D and provide instructions to help you file the Form D with the SEC.

  •   State Law Form D Notice Filings

States’ authority to review Regulation D exempt securities laws is highly restricted.  However, states have notice-filing requirements that must be complied with when offering securities to a resident of its state. The requirements for filing, as well as the timing required for making the filing, differ from state to state, with some states allowing the filing to be made after a resident of the state makes an investment and other states requiring that filing be made prior to any investment. We offer full state law Form D Notice preparation and filing services on a state by state basis.