Information Memorandum: The Central Document in a Sale

The information memorandum is the central sale document. It presents the company comprehensively and serves interested buyers as the basis for their first assessment. In German-speaking markets it is also called an Exposé or sales prospectus.

The memorandum is not distributed openly. Interested parties receive it only after an anonymous teaser and after signing a non-disclosure agreement. Only then is the company''s name revealed.

Definition and function

The information memorandum is the qualitative story of the company in structured form. It answers the questions a buyer asks before a serious offer: what the company does, in which market, with what figures and what outlook.

It serves as the basis for the indicative offer. On its basis an interested party decides whether, and in what order of magnitude, to make an offer. A weak memorandum costs offers and reduces competition in the process.

Structure and content

An information memorandum in practice often runs to several dozen pages. The structure usually follows a proven format:

• Executive summary: the condensed core message, often the most-read chapter.
• Company and business model: history, structure, value creation, products and services.
• Market and competition: market environment, position, customers and competitors.
• Financials: historical figures, current situation and a plan with transparent assumptions.
• Employees and organisation: management structure and key people.
• Transaction structure: object of sale, planned process, framework conditions.

Balance is decisive. The memorandum should convince without glossing over. Buyers later test every statement in due diligence. Overly optimistic portrayals are exposed there and damage trust.

Distinction: teaser, information memorandum, factbook

The three documents differ in depth of detail and timing.

Feature	Teaser	Information memorandum	Factbook
Purpose	spark interest	inform comprehensively	substantiate data
Level of detail	brief, one to two pages	comprehensive, many pages	deep operational metrics
Anonymity	anonymised	name disclosed	name disclosed
Timing	before NDA	after NDA	in or before due diligence
Character	qualitative, promotional	qualitative and quantitative	quantitative, data-driven

The teaser is sent to a wider circle and does not name the company. The memorandum follows after the NDA. The factbook later delivers hard operational metrics as a data-driven supplement. How these documents fit into the overall process is shown in the process of a company sale.

The role of discretion and the NDA

A sale process is sensitive. If it becomes known early, it unsettles employees, customers and suppliers. Discretion therefore comes first.

The anonymous teaser protects the identity in the first approach. Only after signing a non-disclosure agreement (NDA) does an interested party receive the memorandum with the name and the details. This keeps control over sensitive information with the seller. Structured preparation also supports the company valuation, because robust figures secure room to negotiate.

Frequently asked questions

What is the difference between a teaser and an information memorandum?

The teaser is a short, anonymised summary meant to spark interest. The information memorandum is the detailed sale document with name and details. It is released only after a non-disclosure agreement is signed.

How long is an information memorandum?

There is no fixed length. In practice it often runs to several dozen pages. What matters is not the length but that all a buyer''s essential questions are answered clearly and verifiably.

When does an interested party receive the memorandum?

After two steps: first the anonymous teaser, then the non-disclosure agreement. Only then is the memorandum handed over with the company''s name.

What is the factbook for, in addition to the memorandum?

The memorandum tells the qualitative story. The factbook delivers the hard operational metrics as a data-driven supplement. It comes into play later, usually in or before due diligence.

Who prepares the information memorandum?

Usually the M&A adviser together with the entrepreneur. The entrepreneur provides knowledge and figures; the adviser structures, frames and formulates. The goal is an accurate, convincing and audit-proof presentation.