A Private Placement Memorandum, or PPM, is one way to make sure you are giving investors accurate information about the film you are producing. It is a legal document (that you can prepare with the help of your Entertainment Lawyer) that has materials that help pitch the film.
Think of it as a business plan. You’ll include materials to help show the worth of your movie: Bios of cast and important crew members. Script Synopsis. Director’s Statement. The sort of things that can help pique interest in the project.
If you have artwork that is impressive, like character designs or storyboards of that key action sequence where your vampire hunter uses his hot air balloon to fight the dragon, you can add them here. But just like with a short film or a trailer, the caveat is the same – investors will judge these items to be representative of what you’re going to make. So they better be good!
Back it Up With Numbers
Then you also need the numbers to back it up. Include that Chain of Title you have. And the budget that you and your producers have so diligently put together. A prospective schedule is also a good idea. These do not have to be a day by day, line item accounting of every dollar you plan to spend and a breakdown of each shootday, but you want to show them that you’ve considered where you’re going to spend their money.
Include information about where and how you plan to distribute your movie. Distribution is a whole other animal that goes hand in hand with how to prove an investor you’ve given the life of your film clear thought.
This is your chance to show them how responsible you are going to be with the investment you’re asking for. So make a good impression!
And not the Tom Cruise kind (heck, if you have Tom Cruise in your movie you don’t have much risk). But seriously, you have to spell out the risks here. Let investors know, on paper, that investing in a movie is not a guaranteed ROI.
This is to protect you later on as well, because if your movie doesn’t make money, you can say that you informed your investor and were totally honest with them (because remember, lying or misrepresenting things to investors can be a federal crime).
So when you pick other movies that have been successful and say that your film is on par with them in the budget and you aim to follow their trajectory, do it wisely. Again, don’t claim you’re going to be the next Titanic. Research your projections of revenue and discuss them with your Entertainment Lawyer before putting them in your PPM.
You can discuss with your Entertainment Lawyer whether a PPM is necessary for you. It could be that there is a stripped down version that will work that doesn’t delve as deeply into the projections and risks.
But informing your investors of the risks involved is something you should do to cover yourself in case things turn sour and your movie doesn’t make money and the investors lose their money. (again, knock on wood here, it’s not what we want to happen, but we must prepare for the worst case scenario). This way you can say you’ve appraised them of the risk.