A prospectus is an offering document that serves the same purpose as a private placement memorandum, but for publicly traded issues such as companies that sell common stock or introduce an initial public offering. A prospectus is similar to an offering memorandum, but the first is for publicly traded issues and the second for private placements. The offering memorandum may also be referred to as an “offering circular” if it requires registration with the stock exchange commission. Whether you're raising private capital or are going to launch a publicly traded company, a business plan and disclosure document are required.
In investment financing, an offering memorandum is a kind of detailed business plan that highlights the information required by an investor to understand the business. The offering memorandum is then drafted by an investment banker, which must comply with procedures and applicable securities laws and regulations. A private placement memorandum and prospectus is a document used to raise capital and is given to investors to consider investment and, hopefully, funding. A prospectus offer document can provide additional protection to your company and is often necessary to raise debt capital or equity capital in the public and private markets.
A private placement memorandum, also known as PPM, is similar to a prospectus and the term is used interchangeably around the world for private offers, although for private offers the most used term is prospectus. An offer memorandum includes key information about the company's future growth strategy, upcoming market opportunities, the strategy for achieving future projections, and details on market competition. It's a lot like the process of making an initial public offering, but an offering memorandum is aimed at a private placement investment and not at the company seeking funds to go public. The investment banker, financial advisors and the like must provide valuable information, but the offering memorandum must also contain information directly from the company.
