An Information Memorandum (IM) is a package of documents created by business owners for prospective buyers. The primary mandate of an Information Memorandum is to motivate potential investment into your business. Although this package is designed to draw the interest of prospective buyers, it dually serves the purpose of transparency. Owners should avoid exaggeration i.e by not disclosing false information, and aspire to disclose any information that will materially affect the value of the company.
Information Memorandums tend to be very exhaustive as they should include items relating to the financial standing, assets and liabilities, business description, market position, clients, strategies and promotion methods, markets served, etc. of the company.
An Information Memorandum is the most effective way of providing a large volume of information about a company to investors. In order to increase the effectiveness of the document, business owners should include as much information as possible to reduce future correspondence on the same topic.