Are Ppms necessary?

A PPM is not technically required for Rule 506(b) offers to only accredited investors and Rule 504 offers to either accredited or non-accredited investors. However, a PPM is usually advisable, even in those cases where it is not technically required. An issuer should view the PPM as a type of insurance.

Does a convertible note have a valuation?

There are three primary benefits of a convertible notes: They simplify negotiations because you do not have to set a valuation—only a Valuation Cap, nor decide upon a host of other common preferred equity terms. They require less legal documents than do equity investments, saving time and money spent on attorney fees.

What triggers a convertible note?

There are typically three events that might trigger a conversion: subsequent issuance of equity (often preferred) that meets an agreed minimum threshold, sale of the company or substantially all of its assets, and maturity of the note.

Is a PPM legally binding?

The PPM is a self-contained disclosure document consisting of everything that an investor will need to fund your business. The PPM also operates as legal protection that allows you to raise capital from investors while closing the loop on legal exposure and regulatory issues.

What should I look for in a convertible note?

When evaluating a convertible note, there are a few key parameters that must be kept in mind:

• Discount Rate.
• Valuation Cap.
• Interest rate.
• Maturity date.

What should be in a PPM?

A PPM should include notices that are important (sometimes required) for prospective investors. Common investor notices included in most PPMs include: No legal, business, or tax advice (investors need to hire their own counsel or choose to not hire counsel, but they can’t rely on your company’s legal counsel)

What is the purpose of a PPM?

The primary purpose of a PPM is to disclose to prospective investors the terms of a potential investment and primary risk factors involved in making the investment. A PPM also usually contains a considerable amount of information about the business opportunity, structure and management.

What is a real estate ppm?

A private placement memorandum (PPM) is a legal document provided to prospective investors when selling stock or another security in a business. The PPM describes the company selling the securities, the terms of the offering, and the risks of the investment, amongst other things.