Question: What is the typical cost to incorporate a corporation in Delaware? In addition, how much would it cost to put together a private placement memorandum and subscription documents? We plan on issuing shares to friends and family investors.
Answer: Typically, the cost of organizing a Delaware corporation, other than filing fees (as low as $89, but depends on number of shares and par value), would vary based upon your specific situation and the complexity involved, but should not be that expensive. This would depend on the capital structure (e.g., how many classes of shares, if more than one) and a number of other issues specific to your situation. However, The Eastman Law Firm provides entrepreneurs with a variety of flat fee incorporation packages.
However, the price of drafting a private placement memorandum (“PPM”) and related subscription agreements can vary quite a bit, depending on complexity, the number of potential investors, and a number of other considerations such as securities regulations. While many attorneys are experienced in setting up businesses and providing incorporation services, specialized transactional services, such as raising capital through a private placement require much more skill and experience, as they involve significant corporate, tax, and securities considerations. Due to this complexity, a PPM and the related subscription documents would cost quite a bit more than incorporation, and be difficult to give you an estimated cost without more information. I suggest you contact an attorney experienced in these matters, such as The Eastman Law Firm, to get a better idea on the scope and estimated costs involved with a private placement.