Capital Structure and Historical Financial Statements

Arguably the most important section of the private placement memorandum for companies raising growth capital, this section details the capital structure and financial history of the firm. Oftentimes detailing past successes and failures of the firm and trend analysis of the firm's financial statements. Material information, such as past mergers and acquisitions, capital raises, debt offerings, etc, and its successes and failures will be detailed in this section.

This section will likely not exist in the PPM for a traditional search fund, but the PPM for a self-funded acquisition, where the acquisition target has already been identified, will include information on the capital structure of the target and its historic financials.

Management Team Overview

In this section, depending on the size of the management team, an issuer may only have executive management’s biographies. Within the biographies, an issuer details how long the individual has been with the firm and the career history of that individual. This section is straightforward and allows investors to get to know who is operating the firm. Lastly, the section wraps up with details about the ownership structure. For example, is the firm a parent company and operates as a conglomerate, or is the firm an LLC, LP, etc.

For self-funded or traditional search funds, this will obviously include the searchers themselves and may also include any advisors or board that has been formed.

Summary of Terms

This section will include the details of a private placement's offering to investors. The details cover distributions, the terms of the sale, the amount of money that will be raised through the private placement, what the funds will be used for and common governance clauses. In short, the summary of terms agreement section details why the issuer is raising funds, what those funds will be used for and how the investment will be managed.

Below is a template of part of the summary of terms for a traditional search:

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