Presented below are simple steps on how to create an investment memo that you can easily follow.
1. Establish Your Goals and Objectives
Before anything else, you need to establish your main goals and objectives and clearly mention them in the memo so that your potential investors or clients will know what they need to do to help you get to your goals and objectives so they can also benefit from them.
2. Give the Details of the Deal
The details of the deal must be specifically presented after you provide your goals and objectives. These include the name of the organization, the parties involved in the investment deal, the kind of deal that you are having, the finance or money involved, and many others.
3. Specify the Potential Risks
Before both parties bound themselves in an sample agreement, it is vital that you first present the risks that could possibly occur during the transaction so that the potential investors would have a heads up on the possibility of the risk to happen. This will also prevent disputes and misunderstandings that may happen in the future. There are 9 types of risk that you must disclose. These are as follows: liquidity risk, concentration risk, credit risk, reinvestment risk, inflation risk, horizon risk, longevity risk, foreign investment risk, and market risk, which includes equity risk, interest rate risk, and currency risk.
4. Present the Terms and Conditions
The terms and conditions in an investment memo list the rules and regulations that need to be followed by all parties who are involved in the investment. These include the definition of words and phrases, interpretation of the investment terms, completion matters, investment by investors, waiver of claims, warranties, continuing obligations, restrictions, restrictive covenants, permitted transfers, mandatory transfers, termination of the agreement, general provisions, counterparts, governing law and jurisdiction, and parties and signatures.
5. Review Your Work
Once you have finished presenting the key point above, do not forget to review and proofread your work in case of any mistakes that need to be corrected. Check for any grammatical and typographical errors, and make sure that the terms are easily understandable by the parties involved in the transaction. It is better if you simplify the words and make your statements straight to the point.