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Private Placement Memo?

W

wadimbit

Hi all,

I have created a business plan for my documentary film project, complete with a projected budget, synopsis, and schedule timeline. I've also established an LLC to house the project. However, I heard for commercial projects, that one needs a "private placement memo" document to describe the details of the offering to investors. In people's experience, is this document required? The budget for my project is fairly small: ~50K.

Also, another question I had was do filmmakers normally put the investment structure into the business plan? the amount of money per investment, the method in which profits are split (what percentage to the investor, what percentage to the company), etc..?

Appreciate any answers. Thank you

SDK
 
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SDK,

Yes you do need a PPM for investors. And a Subscription agreement for them to sign. If you're raising $50K I would sell 10 units at $5000 each. This keeps your investment group small. Find an entertainment attorney and work with them. They can set it all up for you. Also there are books and websites that can help you out. Google is your friend.

Also you may want to put the profit split in your business plan it wouldn't hurt- a true investor would want to know up front. You definitely have to put it in the PPM and explain how the payback will work etc.

The reality is if you find one investor that will put up the $50K than have a lawyer draw up an agreement, but if you are raising monies then you will need a PPM and subscription agreement, but most of all an Attorney!
I AM NOT AN ATTORNEY AND THIS IS NOT LEGAL ADVICE. I am just sharing what I had to do recently when raising funds for our film.
Good luck
 
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I was planning to go smaller, actually 100 units at $500 / piece, I've only one film as a credit.

but I was advised by a lawyer that a PPM would only become necessary if I was able to obtain a larger investor.

Thanks for the input agcamerasound!
 
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