What is a Private Placement Memorandum?

As you’re facing the various challenges associated with raising funds for your film, you’re almost guaranteed to face a time in which you’re looking for investors that will support your project. While many different options exist, issuing a PPM is likely to come up at some point in your situation. But what is a private placement memorandum and what does it mean?

What is a Private Placement Memorandum?

A private placement memorandum (PPM) represents a unique step that is taken by a film company to sell shares of their film company to “passive investors” in order to acquire funding.

Passive investors represent those who really don’t have an active role in the production. Yet which provide necessary funds to allow the production to take place.

After Much Consideration

Selling shares of your company is never a point blank consideration. It takes a lot of forethought and planning. However, if you’re going to sell shares, the best opportunity to do so and the safest way to raise money is through a PPM.

This method of selling shares provides you with legal protections against any risk that could arise should your company fail and their investments be lost.

The Risks

The PPM will safely disclose any such risks that are involved and will state that there is a potential that you will not find a distributor for your film.

In the event that the film is not a commercial success, there is no fault to you. The investor will not have an opportunity to file a lawsuit against you.

Is a PPM the Only Funding Option?

Absolutely not! A private placement memorandum is just one of many film financing or funding opportunities that a producer can and should look into.

Furthermore, a PPM provides your investors with shares that can give them some insight into your company and offer value. But you don’t have to sell your company off in order to get the funds you need. 

Consider the following additional forms of funding options that could prove useful for your film project:

• Film grants
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• Film fellowships
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• Private film financing
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• Crowdfunding
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• Film contests

Seek Legal Counsel

Say you’re unsure about the idea of a private placement memorandum. And you’re purely interested in finding a way to raise funds to produce a particular project of interest to you.

Consider talking with your attorney about the many funding options that might be available and most suitable to you and your individual needs before you make a final decision.

The Takeaway

And finally, what is a private placement memorandum? It’s a notation that is placed, attracting private investors to your business to purchase shares, with the protection afforded that should your business fail they will not be legally able to sue you.

It’s one of many ways to raise funds for a film business. It should be carefully considered along with other options.