A PPM is commonly used by startups and private companies seeking to raise capital through private placements. Unlike public offerings, these private financings are not subject to the same regulatory disclosure requirements, so the PPM plays a critical role in ensuring transparency. The document typically includes an overview of the company's business model, management team, financial projections, and detailed risk factors. It also outlines the investment structure, use of proceeds, and legal disclaimers, providing prospective investors with a comprehensive picture of the opportunity and potential challenges. By thoroughly disclosing all material information, a PPM helps protect both the issuer and the investors, facilitating a clear, legally sound basis for the investment decision.
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