Article
What is a private placement memorandum?
A private placement memorandum, or PPM, is the disclosure document a company gives investors in a private offering. It describes the business, the terms of the investment, the use of the money and the risks. In a direct listing, the PPM covers the raise from the founder's network before the company files with the SEC.
Joel Arberman, Meraki Partners · Reviewed October 2026. Based on 17 companies taken public since 1999: 11 by direct listing, 4 by reverse merger and 2 by IPO.
What goes into a PPM?
- The business, its market and its plan
- The terms: price per share, minimum investment and what investors receive
- How the money will be used
- Risk factors
- Management, ownership and related-party transactions
- Financial information
- How investors subscribe
Is a PPM legally required?
Not always. Offerings to accredited investors only under Regulation D Rule 506(b) or 506(c) don't require a specific document, but the anti-fraud rules still apply to everything said to investors, so a PPM is the safest way to make complete disclosure. Offerings that include non-accredited investors under 506(b) require specific disclosure.
How does a PPM fit into going public?
The company raises typically $500,000 to $2 million from about 50 people who know the founder, using a PPM. It then files a registration statement so those shares can trade once the stock is quoted. See raising before you go public.
Who prepares the PPM?
Securities counsel, working with management and the adviser. The business plan and financials come from the company.
What should the PPM say about going public?
It can describe the plan to go public as a goal management truly believes in, with the risks that it may not happen or may take longer. It should not promise a listing, a price or liquidity.
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