Focus on the Information Memorandum in the M&A process

The "Information Memorandum," also known as "info memo" or IM, typically takes the form of a PDF document, often in the form of slides.

Format of an IM

The size of an info memo varies based on different criteria:

• The drafting style: some companies prefer to get straight to the point while others take more time to provide details.
• Recommended company size: the larger and more complex a company is to understand, the more extensive the info memo will be.

In general, an info memo consists of 20 to 100 slides.

Sending the IM

Its sending always occurs at the same moment in an M&A process: after sending the teaser, if the potential acquirer expresses interest, the deal's overseeing counsel sends a Non-Disclosure Agreement (NDA). Once this letter is signed by the potential acquirer, the info memo is sent to them.

Read also : M&A teaser: explanations and example to download!

It may happen that the info memo is accompanied by additional financial or technical documents. For example, this could be an Excel document summarizing the target's assets or a financial valuation model aimed at saving time for the buyer.

An Info Memo contains all the necessary information to comprehensively present the target of an M&A operation, as well as its financial performance. This document allows potential buyers to position themselves and make an initial price proposal.

What an IM Contains

The info memo must contain crucial information to achieve the stated objectives:

• A comprehensive presentation of the target: its company, market, competitive position, and history, highlighting its strengths in the best possible way.
• Details on growth prospects, emphasizing ongoing projects to encourage investment
• The company's business strategy
• The target's strengths, such as expertise, innovation, key assets, competent team, and market share, should also be highlighte
• An analysis of the market in which the target operates
• A slide regarding the team / HR statistics, as the buyer often seeks specific expertise related to key personnel of the target company, a crucial aspect, particularly for startups, where the team and founders are essential.
• Financial data: past income statements, balance sheets, and cash flows. For large companies, this information will be more detailed, while for startups, it will be more concise

Attention: the info memo must never include valuation elements! Candidates often confuse the pitch with the info memo. It's important to remember that the info memo aims to allow the potential buyer to make an offer. Therefore, if the info memo contains a valuation, it loses its purpose.

IM Writers

Regarding the drafting of an info memo, it is written by the council mandated for the sale of the target company. Analysts and associates gather as much information as possible through meetings with company executives, reading market studies, and discussions with ecosystem stakeholders. For the financial part, the drafting may be supported by a Vendor Due Diligence (VDD) conducted by Transaction Services or audit firms, providing consistent, secure, and in-depth financial information.

Read also : Focusing on the pitch in the M&A process

In summary, the info memo aims to inform potential buyers about the target while piquing their interest in acquiring it. It has both a commercial and financial aspect and is a valuable tool for finding the ideal buyer at the best price. Its preparation is careful, with a smooth layout of sections to captivate the buyer's attention and highlight the target's strengths.