In pursuit of more efficient fund launches, some managers have explored the nontraditional approach of forgoing the preparation and negotiation of private placement memoranda (PPMs). Although eliminating a PPM can produce real time- and cost-saving benefits, it is hardly a panacea. Any fund manager considering this approach needs to carefully evaluate whether its asset class, strategy and structure are conducive to eliminating the PPM, as well as how its investors and local regulators will respond. To explore these issues, the Private Equity Law Report interviewed Fried Frank partners Mark Mifsud and Gregg Beechey
about the tenets of PPM‑less funds and trends around their adoption. This second article in a two-part series identifies scenarios in which managers can consider launching a fund without a PPM, the role investor preferences play in this decision and trends in the approach. The first article
detailed the actual steps involved in launching a PPM‑less fund, as well as the pros and cons for managers to consider before pursuing that approach. For more on relevant provisions to include in PPMs in traditional PE fund launches, see “How Fund Managers Can Use Non‑Reliance Clauses to Protect Themselves From Investor Claims of Misrepresentation
” (Sep. 24, 2019); and “Contractual Provisions That Matter in Litigation Between a Fund Manager and an Investor
” (Oct. 2, 2014).