Private Placement Memorandum (PPM)

Definition

The PPM describes the fund’s investment approach, risk factors, operational setup, conflicts, fee structure, and legal framework. Its purpose is disclosure discipline: ensuring LPs understand what they are buying, what can go wrong, and how the fund is governed. Allocator Context Allocators use the PPM to cross-check the pitch against written disclosure. Institutions look for consistency between PPM, LPA, and marketing materials. Overly generic risk language is less helpful than precise disclosures tied to the actual strategy—liquidity, leverage, valuation, concentration, and key person dependence. Decision Authority Compliance and legal teams often review PPM content for regulated allocators. Inconsistencies can lead to internal escalation or requests for clarification before an IC will approve. Why It Matters for Fundraising A strong PPM reduces follow-up loops and avoids surprises. LPs rarely allocate because a PPM is “beautiful,” but they frequently stop because it creates uncertainty. Key Takeaways Disclosure discipline is a trust driver Consistency across documents matters most Strategy-specific risks should be explicit Good PPMs reduce delays and misinterpretation