Mergers & Acquisitions · Question

What is an information memorandum in a business sale?

Short answer

An information memorandum is a detailed written profile of the business that a seller shares with shortlisted buyers, normally after a confidentiality agreement. It describes the company, its products, customers, people, financial performance and growth prospects, and the deal on offer. A good one lets a buyer form a serious view before spending time and money on diligence.

In more detail

Think of it as the seller's authorised version of the story, written so a stranger can understand the business without a site visit. Buyers use it to decide whether to proceed, what to ask next, and roughly how to value the company.

Typical contents

Business overview: history, ownership, locations, products and services.
Market position: customers, competition, and the sector's direction.
Operations: plant, technology, suppliers, certifications and key processes.
People: management team, headcount structure and dependence on the promoter.
Financial summary: several years of results, with adjusted earnings explained.
Growth plans and what the business needs to realise them.
Transaction overview: what is being sold and the process timeline.

Standards that matter

Every number must reconcile with the accounts, because a buyer will compare them in diligence. Be balanced about risks, such as customer concentration or pending disputes; a document that hides them damages trust when they surface. Also keep tax and legal claims factual, and have your accountant and lawyer read the draft.

Write for a sceptical reader

Assume the reader works in your sector and will test each claim. Short, specific statements backed by figures outperform enthusiastic adjectives.

An information memorandum is not the contract, and it normally carries a disclaimer that buyers must rely on their own enquiries and on the warranties in the final agreement. Many sellers have it prepared with an advisor, who can also help decide which buyers receive it.

Key points

It is a detailed seller-prepared profile shared with shortlisted buyers after a confidentiality agreement.
Contents span business, market, people, finances, growth plans and the proposed transaction.
Figures must reconcile with accounts, since buyers will check them in diligence.
State material risks candidly; concealment tends to surface later and damage trust.

Who this applies to

Promoters preparing to sell all or part of their business.
Family-owned companies approaching strategic buyers or investors for the first time.
Finance heads asked to compile the document.

Last reviewed 3 October 2026

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