Part of the process of structuring your private placement, or offering, is to target an IRR, or Internal Rate of Return.
But unless you’re constantly in the market, you’re probably just taking a shot in the dark. The solution of course is to talk to the market. Go out and have discussion with potential investors about what you are seeking to do and take note of the feedback you receive.
However, you need to be careful that your market intelligence gathering is not misconstrued as offering securities for sale.
The two things I’ve done to avoid this potential problem:
1. Add a watermark on each page of the Executive Summary that reads FOR DISCUSSION ONLY; and
2. Add disclaimer language to the Executive Summary that explicitly states that the document is not an offer to sell or solicit and offer to buy any securities. Also add language before the financial projections and the term sheet.
If you need disclaimer language, you can download it here:
Now go out and gather some market intelligence so you can structure your deal with confidence.