The following describes the Closing Documents one is likely to receive from the Issuer of a Private Placement.
  • Closing documents include agreements between the Issuer and the Investor wherein the parties commit to participate in the Offering and the specific terms of the investment relationship.  These documents are executed by the Investor and/or by the Issuer as appropriate to the nature of each agreement (see below per each type of agreement).
  • Closing documents can include the following documentation.
 For an equity investment:
    1. Private Placement Memorandum (PPM) – When used, the PPM is the definitive document for the Offering to describe the terms of the Offering and relevant background of the issuer.  It is produced by the Issuer and is for informational purposes.  It is not a signed document.
    2. Articles of Incorporation (for C Corporations) or Operating Agreement (for Limited Liability Companies) – For equity Offerings, the agreements which establish the framework for a business corporate governance and include the obligations of the Issuer relating to the equity being purchased by Investors.  If equity Warrants are issued in conjunction with debt, the Warrants will be identified within this fundamental document of the Issuer.  These agreements also specify the distribution of equity ownership (including options to acquire equity) that will be in effect after the new equity securities are issued.  It is signed by the Investor and the Issuer.
    3. Subscription Agreement (or Purchase Agreement) – The agreement wherein the Investor commits to make the investment and the amount invested.  The Investor makes representations including his or her competence and ability to make the investment decision.  The Issuer makes representations including that the Securities have been authorized within its corporate governance structure.  It is signed by the Investor and the issuer.
     For a debt investment:

For information about questions Investors should ask before moving forward with a Private Placement, please see “7 Key Questions for Evaluating a Company.”