Definition
Private Placement Memorandum (PPM)
The offering document disclosing the deal, its terms, and its risks to prospective LPs.
A private placement memorandum is the disclosure document given to prospective investors in a private offering. It describes the investment, the vehicle's structure, the sponsor's economics, conflicts of interest, transfer restrictions and, at length, the risk factors, including the risk of total loss. A PPM is not strictly required for a Reg D offering to accredited investors, and many single-asset venture SPVs proceed with a short deal memo plus a subscription agreement and operating agreement instead. Where one exists, its function is defensive: it evidences that material risks were disclosed, which is the sponsor's protection against a later claim of misrepresentation.