My acquisition fee just came in at $87,000 on a $2.9M close and I genuinely did not know that number was coming until I saw the HUD.

The short version on vocabulary first, for anyone reading along: an acquisition fee is a one-time payment the sponsor (the person running the deal) earns at closing for finding and structuring the deal. A PPM is a private placement memorandum, the legal document LPs receive before they invest. It discloses the fee, but disclosure and explanation are two different things.

On your actual question: most sponsors let the PPM do the legal work and handle explanation separately, in a pre-close call or a fee memo. The PPM satisfies the legal disclosure requirement. A plain-language conversation is what builds LP trust, and those are not the same obligation. I can't tell you which approach is right for your relationships, and anything touching securities disclosure rules is a question for your securities attorney, not this forum.

The thing worth thinking through is the dynamic you described: a fee that grew materially because of a clause you had forgotten. Your LPs may never notice, but if one of them does the arithmetic from the HUD later and sees $87,000 against a modeled 1.5%, the question won't be about the number. It'll be about why the number moved without a conversation.

A short written explanation, something like "here is what drove the final fee and how it compared to the model," costs you almost nothing and gives an LP something to point to if they're ever asked by their own advisors.

Nothing here is legal or securities advice. Verify the disclosure mechanics with your attorney.

What's your sense of how financially fluent these four LPs are? That changes how much detail actually lands in a conversation like this.

@op the number that jumps out at me is not the $87k, it's that you didn't know it was coming. On my last close, a $1.7M light industrial in Ohio, I had the fee line in a separate tab of my waterfall model with a formula tied directly to final purchase price, so when the seller credit moved in week three I watched the fee move in real time. That discipline kept me from ever having a surprise on the HUD. The LP communication piece is where I'd push back on you though, because four people wired money into a deal where a fee nearly doubled and the explanation was PPM boilerplate they probably skimmed. Even if it's legally clean, that's a trust leak you may not feel until Fund II when one of those four passes. I would go back now, send a short one-pager showing the LOI clause, the credit claw-back, the math, and land on the number before anyone asks you why it changed.

Most LPs I've talked to never read the PPM past page three.