An offering memorandum is a legal document that protects investors in a private placement deal.
It states the objectives, risks, terms, and conditions of the investment opportunity and explains what investors will gain. It can also be called a private placement memorandum, an offering memo, or an OM.
You can use an offer memorandum template to create a straightforward offering memorandum document. Make sure you use an offering memorandum template that’s designed for investing in companies rather than in real estate.
What a typical offering memorandum template includes
Normally, an offering memorandum template should have sections for:
Regulation D disclaimers
Summary of the offering
Company and management information
Terms of the offering
Plan of distribution
Use of proceeds
Discussion and analysis of financial condition
How to invest and investor suitability requirements
Forward-looking financial forecasts
There may be additional sections too. The offering memorandum needs to be honest and objective about the business. For instance, it should include in-depth information about the company’s current and projected financial situations.
The offering memorandum will normally be presented as a straightforward document, such as a Microsoft Word document, divided into sections and paragraphs. It may include tables of information, particularly financial information.
Why is an offering memorandum important?
An offering memorandum gives investors everything they need to make an informed decision about whether or not to invest in a company.
The company can be protected from liability through the offering memorandum, as it proves that the investor was fully informed about the risks of the investment.