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Top mistakes to avoid while producing Information Memorandum


Your information memorandum is an important piece of document. It provides in-depth information about your fundraising proposal and can come really handy when investors make a decision. Here’s a look at some of the top mistakes to avoid when creating an information memorandum. 

Providing Insufficient Information about Usage of Funds

You must have a concrete plan of what you’ll be doing with the funds being raised. Prospective investors are analyzing the management’s skills and their execution capabilities. Very often, business owners provide very little information in the Use of Funds section. This is your opportunity to provide a summary of how the investment funds will be used, and what goals will be met in the next 12 to 24 months. 

Poor Board of Directors Composition 

Investors are effectively investing in a management’s capabilities in executing a plan. This is an important consideration that decides whether your investment proposal receives a nod. A major reason why several businesses fail to raise capital is the composition of the Board of Directors. The Board provides needful counsel, direction and accountability so that the management team stays on target. It is important to have the right Board of Directors in place before you prepare your information memorandum. 

Assuming Only Lawyers Prepare Information Memorandum

If you thought that an information memorandum can be prepared only by securities lawyers, you are in for an expensive ordeal. An information memorandum has as much to do with marketing and business as with legalities. And you’ll rarely find a lawyer who is fluent in both. What’s more, an attorney can be extremely expensive. This is not to say that the CEO should get on to prepare the information memorandum. Many specialist advisors can do this job for you at a fraction of the cost of hiring a lawyer.

Presuming that the Information Memorandum is Simply a Template

Sure, there are some core aspects of an information memorandum that are standard. However, some critical components such as the business plan, the proposed capital structure, the financial projections, the terms of investment and the risk disclosures – these are totally unique and customized to each business. It is but a mistake to assume that the information memorandum is a template. It takes a combination of skills and experience to create an information document that attracts the attention of potential investors. 

Thinking that the Information Memorandum Can’t be Edited

This is perhaps the biggest mistake that entrepreneurs commit when it comes to their information memorandums. In the light of tight credit markets where the funding timelines are elaborate, an investment might take as long as six months (and longer in some cases) to materialize. Your business may see certain changes in this period that might call for updating your information memorandum to ensure your prospective investors have the latest and the correct information. 

In Conclusion
Awareness is critical when you are preparing your information memorandum. Understand the common mistakes, as outlined above, and be aware when creating the document, and you are headed in the right direction.

Are you looking for reliable and trustworthy professional business plans and information memorandums to boost your business? Business Plans is one of the leading brands that offer business plans services in and around Melbourne in Australia. 
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