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How to prepare an information memorandum?


An information memorandum is an important document that an investor would request for. An information memorandum sets the base for your capital raising plans and throws light on the past, present as well as the future plans you have for your business. 

Here are some important headings you must include in your information memorandum. 

Letter to Investors

This could be a Director’s Letter or a Chairman’s Letter. The letter must summarize your journey so far as a business and where the business is headed for. Keep the letter brief but pack in a wallop in every word for maximum punch. Keep it no longer than one page. 

Investment Highlights

This is pretty simple. You could include a bullet list detailing the returns that investors could expect if everything goes as planned. However, it’s not only about the numbers. If you have an edge over the market in some form, highlight that fact too. 

Executive Summary

This is where you summarize the rest of your report. The executive summary provides a brief overview of the business and explains the reason why you’re raising funds. Investors can glance through this to get an idea of your proposal without having to read through the entire information memorandum. 

Business Plan 

This section outlines your business plan. If your business has changed since you initially wrote the business plan, you might want to update it as necessary. You can include details such as success factors, your business model, the market dynamics and the corporate structure. 

Risks

The risk is very much a reality in every business. Even if you have established a monopoly, or are far ahead of the competition, your business is prone to risk. In this section, talk about the possible risks your business faces and what you’re doing to manage those risks. 

Executive Team

This is a good opportunity to showcase the kind of value your upper management team is adding to the business. Provide details about the board of directors as well as the advisory board members. 

Investment Offer

Time to get to the point now! Your investors want to know about the returns they will receive for their investment in your business. If the business is already showing healthy profits and the cash flow is positive, you could throw light on the earnings multiple as well as valuation. If you are a start-up with marginal revenues, focus on the strategic value. 

Financial Statements

Your investors would like to take a look at your operating history. Be sure to include the balance sheet, profit and loss statements and cash flow statements for the past two years at least. If you are a start-up without any history of previous revenues, then generate an estimate for these reports. 

In Conclusion

This outline should give you a clear picture of the kind of information you will need before you can start pitching for investment. You can choose to prepare this information on your own or for best results, hire a team that is very much specializes in preparing information memorandum. 

Are you looking for professional business plans for your business? Business Plans is one of the leading business plans solutions providers in Australia. They offer high-quality business plans for your business at reasonable rates. 


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