15 July, 2020

Compiling a Private Placement Memorandum (PPM)

A Private Placement Memorandum (PPM) is a stand-alone document, in that it contains all the information an investor needs to make an investment decision. As such, PPMs must be drafted very carefully to verify that they are comprehensive and do not omit any information that a reasonable person would consider relevant in making an investment decision. It’s also key that they not contain any information that could be considered inaccurate or misleading.

What Should a PPM Include?

Given that a PPM is intended to provide disclosure of all of the material facts relating to the security being offered, a PPM should generally include, at a minimum, the following topics:

  • Background Information on the General Partner and/or Investment Manager
  • Investment Objective, Strategy, and Limitations (if any)
  • Management Fees, Incentive Compensation, and Other Fees and Expenses
  • Investment, Withdrawal, and Transfer Procedures and Limitations
  • Risk Factors
  • Conflicts of Interest Tax Issues
  • ERISA Issues

Business Challenge

Once an investment bank has retained a company to offer a private placement of shares, the means by which documents are distributed, both internally and to clients, must be tightly controlled in order to rigorously adhere to the rules laid out under Regulation D of the Securities Act of 1933. Regulation D states that there can be no general solicitation or advertisement of securities in conjunction with a private placement memorandum. Because Regulation D requires that only accredited prospective investors be allowed access to the PPM, document security becomes paramount.


In the past, PPMs could be highly volatile documents. Distributing the documents by unsecured channels, like email, allowed the possibility of documents being forwarded to non-qualified parties and risked creating unnecessary confusion if an outdated version of the PPM was distributed. An emailed document is always susceptible to ending up in the hands of non-accredited parties, unvetted investors, and non-relevant members of the team. Any of these scenarios can result in SEC interaction and the possible failure of the deal.


Orchestrating a successful private placement requires both transparency and confidentiality. Today’s modern virtual data room provides investors with secure access to the Private Placement Memorandum and supporting documents, enables strict control and visibility into who has received the PPM, and generates a full audit trail of document activity to verify compliance.

ShareVault offers a centralized, tightly controlled, secure, and customizable data room solution for safely distributing PPMs, which meets the security requirements of Regulation D and offers considerable time and cost savings over traditional methods of PPM distribution. And, because ShareVault is accessible on a 24/7 basis, it has the benefit of attracting a larger number of investors, providing enhanced and timely information, and significantly shortening transaction times.

ShareVault makes the process of using a virtual data room simple:

  1. Upload documents: Quickly create a custom-branded site and import documents using our simple drag-and-drop feature.
  2. Set user permissions: Define user roles and easily control what different users can and cannot access.
  3. Apply document security: Define what users can and cannot do with documents, including the ability to print, save, or block screenshots. Additional security includes the ability to apply dynamic watermarks, restrict access by IP address and computer, and remotely “shred” documents, even after they’ve been downloaded.
  4. Facilitate Q&A: Our Q&A module makes it easy to field and route questions from investors in a timely manner.
  5. Maintain compliance: ShareVault’s powerful and dynamic reporting features provide a complete audit trail when using the data room— a critical tool for allowing organizations to monitor when users access sensitive documents, who accessed them, and what type of action they took with that documentation, even recording the IP address of the user.

Use ShareVault’s Virtual Data Room Software

Using a virtual data room to compile a private placement memorandum to facilitate fundraisings and make informed investment decisions is essential to the PPM process. Contact a reliable member of ShareVault’s team to learn more about our secure data room software.

To learn the best practices for conducting due diligence, feel free to download our solution brief via the link below: