Offering Memorandum

OM.com is a world leader in Offering Memorandum Writing and Consulting

Offering Memorandum

Our team at OM.com writes offering memorandums for nearly all industries. The vast majority of investors that we encounter will require a disclosure document such as an offering memorandum (OM) before capital is allocated to the company. Our team at OM – which is managed and operated by the same team at OM.com, prides itself on writing investor ready offering memoranda. We have assisted in the development of over 5,000 offerings, and our memorandum writing services is of the highest quality, covering nearly all of the world’s major investor jurisdiction, ensuring each OM is properly designed and tailored for each market.

What is an Offering Memorandum
An offering memorandum is a disclosure document given to potential investors by a company seeking to raise capital. Various names throughout the world are used interchangeably when referring to an offering memorandum – such as a private placement memorandum, prospectus and others – however it would not be accurate to call an OM by other names necessarily. The broadest possible term we encounter when raising capital with a specific document is “offering memorandum”, which seems to be the most common terminology (“prospectus” as well, however a “prospectus” is also for public offerings, an OM is for private placements).

Thus, an offering memorandum is a private document used to raise private capital in the private placement market. A company seeking private investment from private investors would need an offering document like the OM to pursue capital.

Offering Memorandum Terms

The terms of the offering memorandum are probably the most significant part of the document preparation. Within the terms of the offering one can find the type of securities being offered, such as stock or warrants, bonds, notes or convertible debt. In addition, the payout structure such as the interest rate or maturity date or if a fund, the liquidation date, whether the fund is income or growth, and other key features will be highlighted in the terms of the offering section.

Other sections of the offering memorandum will detail the tax issues, especially if a company is accepting on foreign capital or if a non-US company is raising capital outside of its domicile. The team of each company will also be showcased in the OM and other needed features as well.  The main point of an offering memorandum is to give an investor the opportunity to view the company’s terms, its management team, and business opportunity, with the intent to be able to make an educated decision about investing in the company.

 

 

 

Different Types of Offering Memorandum

Equity Offering:   Equity offering memorandums are utilized by companies that are selling shares, such as common stock, or for various funds such as hedge funds or mutual funds, who often “participating shares”.  Equity offerings are quite simple: it is when a company offers an ownership structure – in the form of shares, for example – in return for an investor’s money. The most common form of an equity offering is when an investor takes some type of ownership in the company for his/her capital.

Debt Offering:  Debt offerings are when a company issues a bond or a note, a “promise” to return the investors capital with a return on his or money. For example, a company may offer a 10% annual return on the investor’s capital for five years. Thus, each year the investor would receive a 10% return on his/her investment and at the end of year five receive their initial investment back as well. Example: an investor puts in $1 million. The investor received $100,000 per year, each year, for five years. When the bonds or notes mature, at the end of the term, the initial $1milion would be returned.

Worldwide Term Usage

The term “offering memorandum” is understood worldwide to mean a disclosure document that is given to investors.  Many refer to the offering memorandum as a private placement offering memorandum, or even a prospectus, which would not be a fully accurate term.

Subscription Agreement

Every offering memorandum document should include the subscription agreement. The subscription agreement is usually the final part of an OM and would be signed by the investor and company to solidify the deal. It’s much like a contract.

Our team can help draft your offering memorandum for either debt or equity issuance in an effective, fast and affordable way.

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Offering Memorandum