Building your PPM

Crafting a strong PPM as a prospective traditional searcher.

The private placement memorandum (PPM) is at the foundation for fundraising as a traditional searcher. Institutional Limited Partners Association defines the PPM as “a document that outlines the terms of securities to be offered in a private placement,” and it is one of the first formal steps a searcher takes to set up their fund. The PPM should contain all necessary information on the securities being offered to investors, which, in search funds, include an executive summary, investment highlights, principal background, investment opportunity, and industries of interest, just to name a few.

Luckily, for prospective searchers, there are many resources at their disposal to craft a PPM that is consistent with the expectations of traditional search fund investors. For those raising a fund coming out of business school, your school’s ETA club (assuming it has one) should also have examples of PPMs from alumni who raised in recent years. The structure for PPMs is relatively standardized, which should be a sign of relief for those who may be intimidated by long legal documents and raising capital for the first time.

Because investors appear to expect a common structure in a searcher’s PPM, I would like to share some of my lessons in crafting my own PPM and the feedback I received from investors during fundraising. I hope prospective searchers can use this guide to ensure their PPMs avoid silly mistakes (many of which I made), so conversations with investors can go more smoothly.

I’ll walk through setting up the foundation of your PPM, where to spend your time differentiating yourself, where not to, who to get feedback from, and how to identify deviations that will raise questions later on in fundraising.

Let’s dive in.