A Q&A with Vasu: Mastering the Information Memorandum (IM)

Vasu Majumdar, Senior Advisor at BAND and a specialist in Corporate Finance for the Creative Industries shares insights on crafting the perfect Information Memorandum (IM).

Q1: What exactly is an IM?
An IM is a detailed yet concise document that offers a comprehensive view of your business to potential buyers. It’s more than just a pitch; it’s a synthesised, factual showcase of your business’s strengths and opportunities, trimmed of any excess.

Q2: Why create an IM?
An IM enters the spotlight when you’re ready to invite offers from potential buyers. It’s a pre-market tool, your business’s introduction to interested parties.

Q3: Are there any alternative names for an IM?
It goes by several names depending on the context: Investment Memorandum for fundraising, Business Plan for strategic overview, Data Pack for detailed analysis, or Business Briefing Document for concise summaries.

Q4: When would a business owner need an IM?
Your IM debuts once you’ve whittled down a list of genuinely interested parties. After signing a Non-Disclosure Agreement (NDA), the IM is shared, marking the beginning of serious acquisition discussions.

Q5: What’s the anatomy of an effective IM?
Your IM should encompass:
Legal Disclaimers
Engaging Executive Summary
Glossary for Clarity
Key Facts and Figures
Comprehensive Business Overview
Detailed Products/Services Description
Insight into Market Dynamics
Client Overview (confidentiality intact)
Intellectual Property Assets
Revenue and Operating Models
Illustrative Case Studies
Management and Ownership Structure
Future Growth Strategies
Financial Performance Highlights
Appendices for Additional Data

Q6: What should I omit?
Balance is key. Don’t bog down your IM with overly sensitive data like intricate pricing or cost structures. In the ‘Clients’ section, weigh the value of sharing names against the need for confidentiality.

Q7: What’s the perfect length?
The art of the IM is in its precision. Let facts lead the narrative. Aim for a compact yet comprehensive 25-30 pages, avoiding decorative fluff.

Q8: What is the IM’s most crucial element?
While the entire document matters, the Executive Summary and Financial Highlights steal the spotlight. The latter is particularly crucial, providing a snapshot of your business’s financial health and potential.

Q9: What sets apart a stellar IM?
A top-notch IM is rooted in your unique business data. It tells your story through market-relevant facts, not just attractive visuals and superfluous words. Its success is measured by the quality of offers it attracts.

Q10: As a Corporate Advisor, how do you support business owners in preparing a water-tight IM?
Each advisor has a different approach. First, I get to know the business owner, including what drives them personally and professionally and their key objectives. I’ll then dive deep into their financial and commercial information. Once I’ve understood the stakeholders and the underlying business, I create an IM Strawman (a skeleton structure) followed by a series of workshops to initiate a collaborative approach tailored to your business. This phase can be intense, but a good advisor stays patient, earning the client’s trust to build an effective IM.

With these insights from Vasu, you’re better equipped to understand and prepare an IM. For a deeper dive and practical advice, get in touch with Vasu or take advantage of our upcoming BAND event on January 24, 2024 which will look at these topics in more detail.