Film Private Placement Memorandum

If you are currently immersed in independent film funding, you have likely heard the term Film Private Placement Memorandum (PPM). In the US, there are certain fundraising requirements if you are soliciting unaccredited investors, and in some instances, even accredited investors. In these cases, you will need to provide financial disclosures, also known as prospectuses that are written into a PPM.

What is a PPM?

PPM stands for Private Placement Memorandum. Issuing a PPM lets your company sell shares of your film to passive investors, which are those who invest, but take no active role in the production. The PPM commonly provides investors with material information, such as a description of the company's business, financial statements, biographies of officers and directors, detailed information about their compensation, any litigation that is taking place, a list of material properties and any other material information.

Do You Need a Film PPM (Private Placement Memorandum)?

Our Film PPM Template is designed (and legally required) for filmmakers who want to:

• Raise film financing of $100K-$5M from outside investors who will not actively participate in your film production (Passive Investors)
• Protect your project, your production company (LLC) and your investors and follow all legal requirements
• Raise funds from both Accredited and Non-Accredited investors
• Be able to publicly advertise your offering in order to receive investor funding
• Demonstrate to their investors how their investments will be paid back (distribution waterfall)
• Save about $10K getting a PPM made from scratch and use one already proven in the film industry

New! Film Private Placement Memorandum (PPM) Template

This complete Film Private Placement Memorandum was used by successful independent producers several times to raise money for full-length feature films at budgets ranging from $350K -$8M. Our Film PPM Template uses real-world current samples from an LLC production raising money right now for 2024. Previously, this same Film PPM was used to raise funds for:

Alternatively, we offer our Film Investor Agreement Outline which includes explanations, sample clauses and key sections geared towards active investors. It is not a complete legal agreement, like the PPM, but offers guidance and a lot of legal language that can be re-used.

Indie Filmmakers - Do You Need a PPM (Private Placement Memorandum)?

Each PPM is different, but there are generally 10 sections. The section "Movie and Industry," will be the same information in your Film Business Plan and Financial Projections and the business plan process will help you to identify your market, audience, distribution plan, industry comparables and more. This information will then turn into the Industry section of your PPM, and the rest is legal and financial disclosures that meet SEC rules.

How does a PPM affect your independent film?

Having a PPM is as much for your protection as it is for your investors'. The primary purpose is to give producers the opportunity to present all potential risks to potential investors, such as the inability to find distribution or that the film may never achieve financial success. This protects the producers from being subject to investors making claims they were not adequately warned about film industry risks. For this reason, it is vital the contents of the PPM be accurate and complete and meet the highest standards of full disclosure, under securities laws, to potential film investors.

In drawing up a PPM, be honest about the film you are making and how you see your projections. This honesty will protect you later on. Do not oversell your film. If you are producing a low budget independent film, that will more than likely be shown at a sales market or film festival, then your PPM should not focus on major theatrical releases. When using comparable films or revenue projections, be as conservative as possible. For example, your found footage film should not reference Blair Witch Project and/or Paranormal Activity, as these are the exceptions in the industry. Yes, everyone hopes for a breakout star film, like the recent Everything Everywhere All at Once, but the purpose of a PPM and Business Plan is to be realistic and honest. Using sequels or franchises when putting numbers together is also not recommended, as they they will skew your numbers.

Where can I get a Film PPM?

Entertainment law firms are a good place to start and are usually in the the $10K - $20K range or you can try online and find an online firm that specializes in PPM's for far less. However, before doing business with them, make sure they have adequate experience in films. While the PPM does not have to be written by an attorney, it must be reviewed by a qualified attorney to ensure it complies with all federal and state regulations.

Sections of a Film Private Placement Memorandum

(1) Summary of the Offering

Learning the contents of a film private placement memorandum is easier than you may think. Now that you know what a PPM is, and how it can help you raise money from Film Investors, let's look at the 10 sections of a Film PPM.

• Summary of the Offering
• Movie and Industry
• Terms of the Offering and Securities Being Offered
• Estimated Use of Proceeds
• Security Ownership of Management and Certain Security Holders
• Interests of Management and Others in Transactions
• Compensation of Management, Key Personnel
• Plan of Distribution of Units
• Financial Information
• Litigation, Legal Matters

The first section of the document, Summary of the Offering, is the most comprehensive and represents the first impression you have on film investors. It is where you first outline your Company, Film and Financial details. The following represents a list of all of the details that make up the Summary of the Offering.

Company Details

• Name of offering entity (LP, LLC or corporation)
  
  
• Contact Information
  Address
  Phone Number and Fax Number
  Email Address
  
  
• State in which entity is formed (or to be formed)
  
  
• If already formed, date of formation - If not formed, will it be formed before or after start of offering
  
  
• Purpose of Offering Entity - For most of you, the production of a feature film

Film Details

• Name of Film - If using a working title, you should specify this
• Screenplay Writer(s)
• Director
• Producer(s) - include Executive Producers as well
• Any Cast attached

Financial Details

• Size of Unit - ($ per unit, interest or share)
• Number of units to be sold
• Size of total offering
• Size of minimum investment
• Payback %'s to investors (if applicable)
• Any interest payable to investors (if applicable)
• Is the offer available to non-accredited investors?
• Impound or non-impound - (money escrowed until certain level of investment reached)
• Commissions and/or Fees (due diligence fees and finders fees)
• A list of any selling brokers
• Is there a selling agreement with a broker?
• States, Countries where Units are offered
• Name of Manager(s) and position(s)
• If Manager is an entity, the Owner and operator of Manager
• Resumes for people mentioned above
• If this is an existing entity, divulge any info on prior projects related to the offering
• Businesses, financial data, copy of all governing documents
• Identity of any predecessor entities and some summary information regarding how much money has been raised and how the proceeds were used.
• If the offering entity already exists, do they have any financial statements?
• If the manager of the offering entity is an entity itself, are there any financial statements for it?

Although this is just the first section of the PPM, if you can answer the majority of these questions, then chances are, you are ready to put together a meaningful business proposal for your film. If you aren’t sure about these questions, or are on the fence about certain answers, then you are simply NOT ready to approach investors about your film.

You may have a screenplay you believe in, but if you do not have a clear financial plan, you likely won't be able to respond intelligently to a savvy investor who will ask you these questions. If you are making an independent film, it is time to get in that mindset – which means YOU need to make it happen. Seek out these answers and experienced producers, and don't get discouraged by a cold shoulder or a negative response. It only takes one positive response.

(2) Film PPM Industry Section

The next section of your PPM, following the Summary of the Offering, is Your Movie and the Film Industry. Your Film Business Plan and Financial Projections should provide you all the information you need to complete this section.

• The anticipated MPAA rating of your film
• Screenplay - Is it available for prospective investors to read?
• Synopsis of the Film - Your synopsis should not be longer than a page.  Every story has a beginning, middle and end – keep it to that.  If you cannot keep this to one page, then you are not ready to share your synopsis. You will need a short synopsis for everything from your PPM, your business plan, your website, sales material, festivals, etc…
• List of Filming Locations - If known – which should also factor into a possible Tax Credits
• Type of Film - HD, 35mm, etc.
• Days or Weeks of Filming - anticipated. Not the days of the week, but the number of days and weeks.
• Weeks of Post - anticipated. Most filmmakers think only of getting their film ‘in the can.’  However, even if you’re looking only for production coin, how can any investor take you seriously if you haven’t thought out your post-schedule?
• Comparable Films - Do you want to include a section on 'comparable films?' If so, which films do you consider comparable and what info do you have on cost of making film and revenues? Make your comparables conservative.  If you are making a found footage film, steer clear of using films like Blair Witch Project and Paranormal Activity. They are the outlier, not the norm.  Also make sure your data is accurate in terms of box office receipts, budget, etc…
• Special Information - Any specialized information you want in the section of PPM dealing with general movie industry considerations. Has there been an upward trend in horror films recently? Are you making an IMAX film? 3D?
• Distribution - Is there any in place? What is your plan? Are you planning on going the festival route, hoping for a negative pick-up, or self-distribution (VOD, direct distribution or four-walled)?

(3) Film PPM Offering Section - Terms and Securities being Offered

The next section of your PPM, following the Summary of the Offering, and Your Movie and the Film Industry, is the Terms of the Offering and Securities Being Offered. The final sections of your PPM detail the terms of the offering, as well as distribution of profits.

Amount of Offering
How much money are you looking for? This is not necessarily your budget, as you may have a tax credit, equity already raised, loans or soft money commitments.

Price per Unit
How much is the minimum investment in the film?

Minimum # of Units

• Just because you have a set budget doesn’t mean you will raise the full amount. You need to be prepared for a situation where you take your project to market and you raise a percentage of what is needed. The minimum number of units refers to how many units you need to sell in order to start production. This is a good reason why you should know your budget inside and out.
• If this is an existing entity, provide info on number of equity holders to date, as well as consideration paid for equity to date.
• Number of authorized shares (if an existing corporation).

(4) Estimated Use of Proceeds

• Prioritized use of proceeds in case not all funds are raised, or guidance on how proceeds will be used as money is raised. Include cost of organization, legal fees, offering fees, cost of offering, movie production, marketing, distribution (if applicable).
• Will it sit in escrow until the minimum amount is hit? Once that amount is hit, break down the process (Pre-Production monies, Production Monies, Post-Production monies).

(5) Security Ownership of Management and Certain Security Holders

Who owns shares of the film at the onset? This info is needed for management of offering entity and/or larger shareholders of the entity.

(6) Interests of Management and Others in Transactions

This section includes employment agreements, option and equity agreements, loans (from someone to company or from company to someone), agreements to supply, buy, etc. involving management and/or its affiliates.

(7) Compensation of Management, Key Personnel

Compensation of all kinds, inclucing salary and backend.If you do not have crew in place, or have not worked out their deals, then leave them out.

(8) Plan of Distribution of Units

How do you plan to sell Units in your film? Will you have a Broker/dealer or will Units be sold by management? If a broker, include all relevant agreements.

You must also detail the terms of any agreements regarding commissions, due diligence and finders fees in regard to sale of Units.

(9) Financial Information

This section presents the balance sheets for offering entity and Manager of offering entity.

(10) Litigation, Legal Matters

This section lists any lawsuits, pending or actual, against the company or its management.

In summary, the ten main sections of a PPM are:

• Summary of the Offering
• Movie and Industry
• Terms of the Offering and Securities Being Offered
• Estimated Use of Proceeds
• Security Ownership of Management and Certain Security Holders
• Interests of Management and Others in Transactions
• Compensation of Management, Key Personnel
• Plan of Distribution of Units
• Financial Information
• Litigation, Legal Matters

Related Articles:

• Film Investor Financing Templates
• Film Business Plan Services
• What is a Film Investor Agreement?
• What is an Independent Film Financing Plan?
• What is an Accredited Investor?
• Do You Need A Private Placement Memorandum?

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FilmProposals Recommended Entertainment Lawyer

FilmProposals is thrilled to announce we have partnered with Dori Zavala who offers a variety of filmmaker legal services, some designed just for FilmProposals Filmmakers. Dori is happy to work with our PPM Template and Legal Contracts. Dori is an award-winning attorney and filmmaker with over 23 years experience in the legal, business and finance fields. She is the founder of Open For Show Business, a revolutionary entertainment law and consulting practice that provides high-level strategic legal services and consulting to filmmakers to guide them in the business, legal and financing aspects of funding and distributing their films. Find out more at openforshowbusiness.com.

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