Building the Perfect Information Memorandum Tips

We prepare a detailed and well-presented information memorandum which is a great selling tool (see our building the perfect IM tips)

Does the perfect information memorandum (IM) exist?

Probably not. We like to think the IM provides a really good general brief about various components of the business yet isn’t to in depth or detailed. We want buyers to be intrigued and ask questions not to make assumptions or be shown to much that they think they have heard it all.

Our IM’s might offer a paragraph or two about several key areas more information if required and a few photos and perhaps a map, a graph or a table depending on how the information is best demonstrating the business. They are all different and every owner provides the information to us a different way.

Our IM’s cover as general headers and topics as a basic list some of the following;

  1. Financials with explanations and hopefully pricing methodologies for the business. We may need to provide comments and notes as well.
  2. Plant and equipment. What is included, not included, on lease, to be paid out, on consignment or hired. Some plant and equipment deserves commentary if it is new, unique or hold a point of interest to the business.
  3. Marketing and promotion. How does the business generate sales, what marketing has or does work? What is the marketing strategy? Etc
  4. What is the lease terms, rent and what do you get? Car parking, storage, outgoings included etc What is the rent, outgoings payable and the GST. If there is any improvements or interesting points about the place you occupy this can be mentioned.
  5. Do you have special deals, arrangements or payment terms? How do you order, when do you order and why these suppliers are examples of content you may comment on here.
  6. What CRM or database do you use and why? What does that system offer, is it owned, under licences, leased and how does it help running the business?
  7. What about your location? Where are you located, who is the business customers, demographic and why does this location work well for your business. It could be the best street, central to many suburbs, an easily accessed car parking area and so on. You may get data about the area, the population and cut and paste a google map in this section
  8. Talking about staff, the staffing structure, pay rates, remuneration and the owners involvement is also a very important aspect as buyers will want to work out how they may fit into the business. It is essential to show comfort about what the owner does and that this role can be replicated or managed whilst the new owner is in transition and learning the business. If you can show long serving, reliable staffing and a culture this will go a very long way to helping you sell the business.