Signing Legal Contracts in California
Sep 4 2019 0

What Is an Offering Memorandum?

In most cases an offering memorandum, also referred to as an offering memo or an OM, is a document that is needed if you want to raise a particular amount of capital from corporate investors. This document is one of the single most important things you can give to a company investor, besides the company’s actual business plan.

While the primary goal of a company’s business plan is to outline the company’s business model and explain just how the business plans to turn a profit, the offering memorandum is a document that explains what the company’s investors will receive in exchange for their total investment in your business. After an offering memorandum is handed to an investor, she or he may then opt to invest their money into the company based on the business and financial details that are spelled out inside.

For more information about writing out a comprehensive offering memorandum, you should reach out to the corporate attorneys at Leiva Law Firm as soon as possible.

What is Contained in an Offering Memorandum?

What Is an Offering Memorandum?

A business’ offering memorandum might hold a bunch of details that pertain to the sale of the business’ securities. A few of the details that should be included in a business’ offering memorandum include but are not limited to the following:

  • The securities that the business is offering
  • The cost of each of the securities that the business is offering
  • The business’ market
  • The business’ management team

Equity Offering Memorandum

Businesses that sell shares such as common shares or common stock must usually use an equity offering memorandum. The same goes for businesses that use hedge funds or mutual funds. Equity deals are those kinds of deals in which the business sells a stake in that particular business that is akin to ownership. In the case of hedge funds, equity may be sold as participating shares even though this might not permit the investor any voting rights within the company or any ownership.

It is vital that the investor is given an offering memorandum in this context so that she or he will have the ability to make an informed choice regarding your company’s investment strategy and investments. Additional noteworthy documents that relay this important information include the private placement memorandum and the prospectus as well.

Debt Offering Memorandum

When dealing with businesses that give out notes, debentures, bonds, convertible bonds, and other forms of debt securities, an offering memorandum must also be written up. In this example, the offering memorandum needs to detail information such as the total amount that the business is looking to raise, the maturity date, and any applicable interest rates too. It might also include details concerning depository services and settlement services, as well as clearing.

Offering memoranda are a crucial part of investing in a corporation. These documents are necessary for all investors in the corporation. At Leiva Law Firm, our helpful attorneys can answer all of your legal questions about these memoranda as they pertain to California law and can assist you with composing a full and complete offering memorandum for your company’s investors. To schedule a free consultation and case evaluation with a California corporate attorney, please call us at 818-519-4465. Our attorneys speak English and Spanish.


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