Rise of PPM‑Less Funds: Identifying the Pros, Cons and Process of Launching a Fund Without a PPM (Part One of Two)

As the private fund industry has matured, it is becoming increasingly difficult for managers to nimbly launch funds and put money to work in the market. A potential cause of this difficulty is the amount of time, care and cost associated with preparing and negotiating the private placement memorandum (PPM) for a new fund. Further, PPMs expand due to additional disclosures prompted by regulatory scrutiny, resulting in documents that are potential obstacles to fund launches and impractical for some investors to parse. To avoid these problems and streamline their efforts, some managers are choosing to forgo PPMs altogether when launching their funds. To explain this trend toward PPM‑less funds, the Private Equity Law Report interviewed Fried Frank partners Mark Mifsud and Gregg Beechey. This first article in a two-part series explains the mechanics of launching a fund without a PPM, as well as the benefits and downsides of this approach. The second article will describe contexts where this approach is appropriate, as well as how investors and regulators have responded to PPM‑less funds. For additional commentary from Fried Frank attorneys, see “Select Issues for Structuring Qualified Opportunity Funds” (Jun. 4, 2019); and “Former SEC Senior Counsel Offers Her Current Perspective on the SEC and the Private Funds Industry” (Jul. 12, 2018).

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