Equity Investment Legal Docs

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September 13, 2022

by a searcher from Tulane University - A. B. Freeman School of Business in Austin, TX, USA

We are raising equity from investors and want to get an understanding of what kinds of legal documentation are needed (accredited investor form, etc.). We have talked to an attorney who believes that a full PPM might be overkill so we wanted to see what other options people have used in this same scenario.

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Reply by a professional
from University of Denver in Denver, CO, USA
If we have a client that is raising money from accredited investors only under a 506(b) exemption, we oftentimes advise them to use a beefed up subscription agreement with a short description of the business and risk factors, with a copy of the LLC Agreement (or corporate documents) attached. We would also include an Accredited Investor Questionnaire. With a 506(b) offering with only accredited investors, there are no mandatory disclosure requirements, however, you are always subject to the anti-fraud rules.
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Reply by an investor
from Columbia University in Dallas, TX, USA
Agree with Search Fund Primer comment. Answer will depend on how many and what types of investors as well as how you sourced them. But definitely should consult with an attorney that knows how to do this.
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