An information memorandum is a document aimed at prospective investors/buyers. The prime aim of an information memorandum is to encourage prospective investors to invest in your business. Apart from helping you to draw interest in your business, an information memorandum also helps establish transparency.
An information memorandum package is usually lengthy as it must contain information about the company’s assets and liabilities, its financial position, market position, business description, strategies, clients and target market.
The Importance of Having a Well Organised Information Memorandum
A top-quality information memorandum offers a great opportunity for you to present all the relevant information about your company. It’s important to present the information in a logical, appealing and coherent manner. After all, the document is a reflection of the company’s commitment to the sale, professionalism as well as the quality of management.
An Information Memorandum is crucial for ensuring a smooth transaction as it nurtures transparency and minimizes the need for constant correspondence.
Even though the purpose of an information memorandum is to invite investment, it shouldn’t be used a pitch book. On the contrary, it is primarily used as an informational package about the company.
This document provides a holistic view of the operations of the organization that seeks investment. It can be considered as a mission-vision document of a company as it provides information about its goals in the short-term as well as in the long-term, and the benefits the investor will receive by investing in the company.
What to Include in an Information Memorandum?
Here’s a quick checklist to help ensure you have covered all the essential information in your information memorandum.
Executive summary – Include an overview of the company, the scope of the investment, the key financials as well as critical investment consideration.
Company – Provide information such as business model, milestones, company history, legal structure, and corporate vision.
Business – What is the company’s target market, where are the business units located, what are its offerings and who its biggest clients?
Operations – Provide details about suppliers, logistics, production and distribution, marketing and sales, quality management, systems and processes, and research and development.
Resources – This section should include information about the organization, its employees as well as the infrastructure.
Customers – In this section, provide an overview of your important customers, a summary of attrition trends as well as projections, customer concentration analysis and a detailed account of the company’s market share.
Industry – Here, you can provide information about the industry structure, your strategic position in the industry, the company’s competitors as well as the company’s competitive position.
Financials – Provide an overview followed by key financials such as balance sheet, profit and loss statement, cash flow statement and currency trading.
Outlook – This is an opportunity to summarise the company’s existing operations, to highlight the company’s short and long-term goals, to summarise the important growth opportunities and an overview of the main strategies being used.
The information memorandum of a business is an important document that helps create the right impression on the prospective investors. Get it right the first time to make the most of capital raising plans.
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