Private Placement Memorandum (PPM)

Allocator relevance: A core diligence artifact—defines risks, fees, conflicts, and eligibility requirements in writing.

Expanded Definition

PPMs are common in private funds and private offerings. They include the investment objective, strategy, risk factors, fee and expense disclosures, legal structure, subscription process, and sometimes historical performance. While marketing materials are promotional, the PPM is where risk and disclosure language lives and where conflicts are often documented.

Allocators use the PPM alongside the LPA and side letters to understand the true terms and risk profile.

How It Works in Practice

Investors receive the PPM during fundraising or onboarding. Legal and compliance teams review it for risk factors, restrictions, and alignment with internal policy. The PPM works together with subscription documents to establish disclosure.

Decision Authority and Governance

Governance requires that decision-makers rely on disclosed risks and that exceptions are documented. In institutions, compliance may require formal sign-off that PPM terms meet policy.

Common Misconceptions

• The PPM is just marketing.
• The LPA is the only document that matters.
• Risk factors are boilerplate and ignorable.

Key Takeaways

• PPM is the disclosure backbone.
• Risk factors and conflicts sections are high-signal.
• Use PPM + LPA together to understand real terms.