What is an information memorandum and how do I create one?

The information memorandum (IM) is the document that we prepare for our clients that introduces your business to potential buyers. It's not a marketing brochure and it's not a set of accounts. It sits somewhere in between: a factual, well-structured overview that gives a serious buyer enough information to decide whether they want to take the conversation further.

A good IM doesn't exaggerate. It doesn't hide problems. And it doesn't read like it was written by someone who's never set foot in the business. It presents the opportunity clearly, answers the obvious questions, and gives the buyer confidence that the seller knows their business inside out.

Most IMs for small and medium business sales run to between fifteen and thirty pages. They're prepared after the business has been valued and before it goes to market, and they're only shared with buyers who have signed a non-disclosure agreement.

Why does the IM matter so much?

Because it's the document that determines whether a buyer engages seriously or moves on.

A buyer reviewing opportunities will typically look at a one-page anonymised teaser first. If the sector, size, and headline numbers are interesting, they'll sign an NDA and request the full IM. From that point, the IM is doing the heavy lifting. It needs to answer enough questions that the buyer can assess whether to proceed to a meeting, a site visit, and eventually an offer.

A weak IM generates weak interest. If the document is vague, poorly structured, or doesn't address the things buyers actually care about, it creates doubt. The buyer assumes that if the seller can't present the business clearly on paper, the business itself might be equally disorganised. That's not always fair, but it's how buyers think.

A strong IM generates genuine engagement. When a buyer reads a document that's honest, well-evidenced, and clearly written by someone who understands their business, it builds confidence before the first conversation has even happened.

What should an IM include?

The structure varies, but most effective IMs cover the following areas in roughly this order.

1. Executive summary. A one to two page overview of the business: what it does, where it operates, its key financials, and the reason for the sale. This should be written last, even though it appears first, because it's a summary of everything that follows. A buyer who reads only the executive summary should come away with a clear picture of the opportunity.
2. Business overview. The history of the business, how it was founded, how it's evolved, and what it does today. Keep this factual and concise. Buyers don't need your full autobiography, but they do want to understand the trajectory: how the business got to where it is, and the key decisions that shaped it.
3. Services and clients. What you sell, who you sell it to, and how the relationships work. Include a breakdown of revenue by service type, client segment, or contract type. If you have recurring revenue, contracted income, or long-standing client relationships, this is where to highlight them. Avoid naming specific clients at this stage (that comes later in due diligence), but give enough detail that the buyer understands the revenue mix.
4. Market and sector. The market you operate in, its size, growth trends, and competitive landscape. You don't need a forty-page market analysis. A concise overview that shows you understand the dynamics of your sector and where the opportunities and threats lie is sufficient. If there are favourable tailwinds (demographic trends, regulatory changes, increased demand), mention them with evidence.
5. Operations. How the business actually runs day to day. Your team structure, key processes, systems, premises, and any significant operational assets. This section should give the buyer a practical sense of what they'd be taking over. Include an organisational chart if the business is large enough to warrant one.
6. Team. A summary of your workforce: number of employees, key roles, average tenure, and any notable capabilities or qualifications. In regulated sectors, the qualifications and registrations of key staff are particularly important. You don't need to name everyone, but the buyer should understand the depth and stability of the team.
7. Financial performance. Three years of summary financials: revenue, gross profit, overheads, and adjusted EBITDA or SDE. Present the adjustments clearly, with a brief explanation for each one. Show the trend. If performance has been improving, make that obvious. If there's been a dip, explain it honestly and show the recovery. Include a simple summary of the balance sheet and any significant assets or liabilities.
8. Adjusted earnings and add-backs. This deserves its own section because it's where buyers focus most of their attention. List every adjustment, the amount, and a clear justification. Common add-backs include: owner's salary above market rate, personal expenses, one-off professional fees, non-recurring costs, and related party transactions that wouldn't continue post-sale. Keep the list as short and defensible as possible. Every add-back will be challenged during due diligence.

What makes a bad IM?

A few patterns we see regularly.

Too much narrative, not enough substance. Pages of text about the company's history and vision, with the financials buried on page twenty-two. Buyers want the numbers early and clearly presented.

Overly optimistic projections. Including a hockey-stick forecast that bears no relationship to historical performance. Buyers have seen this a hundred times and it damages credibility. If you include projections, they should be grounded in the historical trend and supported by specific assumptions the buyer can evaluate.

Hidden weaknesses. An IM that only presents the positives is less persuasive than one that acknowledges the challenges. Buyers know no business is perfect. An IM that pretends otherwise feels dishonest.

Generic content. Market analysis copied from industry reports without connecting it to your specific business. Boilerplate language that could describe any company in the sector. The IM should feel like it was written by someone who knows this business intimately.

Poor presentation. Typos, inconsistent formatting, unclear charts, and documents that look like they were assembled in a hurry. The IM represents your business to people who've never seen it. If the document looks unprofessional, they'll assume the business is too.

Should I write it myself or have a broker do it?

Most sellers benefit from having a broker or corporate finance advisor prepare the IM, because they know what buyers want to see and how to present information in a way that generates engagement without overstepping into exaggeration.

That said, the best IMs are collaborative. The broker provides the structure, the market context, and the commercial framing. The seller provides the substance: the financial data, the operational detail, and the nuances of the business that only someone who's run it would know. Neither party can produce a great IM alone.

If you're preparing an IM yourself (for a direct sale or an MBO, for example), follow the structure above, focus relentlessly on clarity and honesty, and have your accountant review the financial sections before you share it with anyone.

What happens after the buyer reads it?

If the IM does its job, the buyer's response is: "I'd like to learn more." That typically means a meeting, either in person or by video, where they can ask questions, get a feel for you and the business, and decide whether to move towards making an offer.

The IM doesn't close the deal. It opens the door. But a door that opens well leads to better conversations, stronger offers, and a smoother process from start to finish.

What should I do next?

If you're considering selling, the IM is something to think about early, even if you're not ready to go to market. Knowing what information the document will need helps you identify gaps in your preparation: financials that need tidying, adjustments that need documenting, or growth stories that need evidence.

Our free valuation calculator gives you a starting point for understanding what your business might be worth. If you'd like to discuss what preparing an IM would involve for your business, James is happy to talk through the specifics.