As Robert pointed out correctly, having a well-crafted
private placement memorandum in place is a material aspect of accessing capital
markets. However, as you have learned the hard way, attorneys often work on
these type of documents strictly from a legal perspective, which often severely
restricts their usability.
I’m not aware of any rule under Regulation D that would
require registration outside the issuer’s domiciled state, unless your offering
is structured as an intra-state offering. But that’s hard to tell based on the
information you provided.
Sending out numbered copies of your private placement memorandum
is standard practice, but in all likelihood you won’t be able to consistently qualify
recipients as Accredited or Sophisticated Investors. This is typically done by including
a segment titled “Suitability Standards”, which requires recipients to return
the private placement memorandum immediately if they don’t meet the outlined criteria.
Another option is to provide a so-called purchaser questionnaire that
drills-down on the specific wealth and sophistication requirements a recipient
has to match to qualify as an investor. Please note that these wealth
requirements have recently been amended pursuant to the SEC’s CDI 179.01
(Compliance and Disclosure Interpretation).
There’s a good article available on our website that
explains these new requirements in detail:
As far as building a following for your offering is
concerned, it’s going to be a tricky path which will likely involve some
serious legwork. But there are ways to promote it without resorting to
advertising or general solicitation. If you need some good ideas for
identifying high-net-worth and ultra-high-net-worth individuals in your area,
take a look at our whitepaper “Reaching high-net-worth individuals with your
private placement”. It’s available at http://publications.fastventures.com/reaching-high-net-worth-individuals-with-your-private-placement
It’s a complete road-map and decision-making guide for
marketing your private placement to qualified Accredited or Sophisticated
Investors. We developed these strategies and research techniques while raising
$5 million for our distressed real estate investment fund. Besides valuable
online resources, tips for building key relationships and actual marketing
collateral, we also included a schedule that enabled us to stay on track and complete
every task necessary within the required timeframe.
If you’re interested in discussing your project in greater
detail, please feel free to send me a PM or contact me via our website. I’ll be
glad to give a few more pointers.
I hope this helps
Advanced Document Design for entrepreneurs, intermediaries, and the financial services industry.