An information memorandum is a structured document you prepare before going to market that gives serious buyers a comprehensive picture of your business — its financials, operations, people, customers, and why it’s worth what you’re asking. In Australian SME sales, you won’t get far without one. Buyers who can’t understand the business from a document won’t sign an NDA; buyers who sign the NDA but find the document thin will walk.
What Is an Information Memorandum?
Also called a CIM (Confidential Information Memorandum), sales memorandum, or just “the IM” — this is the centrepiece document of any business sale. After a buyer signs a confidentiality agreement and expresses serious interest, the IM is what lands on their desk.
Think of it as a prospectus for your business. It’s not a marketing brochure (buyers see through gloss immediately) and it’s not a data room. It sits in between: detailed enough to answer most of a buyer’s preliminary questions and prompt serious ones, but curated so you’re presenting your business in its best honest light.
The IM is one reason the M&A process takes months rather than weeks. Done properly, it takes time to produce.
What to Include in an Information Memorandum
A well-structured IM for an Australian SME typically covers the following sections:
- Executive summary — a two-page overview that could stand alone as a teaser. If you get this right, buyers read the rest. If you get it wrong, they don’t.
- Business overview — what the business does, how long it’s been operating, where, and its legal structure
- Products and services — what you sell, how it’s priced, and margins where relevant
- Market and competitive position — where you sit in your industry, who your main competitors are, and why customers choose you over them
- Customer base — concentration (how many customers make up 80% of revenue), retention rates, and whether revenue is contracted or repeat
- Operations — key processes, facilities, equipment, technology, intellectual property
- People — organisational chart, key staff, and — critically — how dependent the business is on the owner
- Financial summary — three years of historical P&L and balance sheet, normalised to show true earning power. This means EBITDA add-backs explained clearly and credibly.
- Growth opportunities — genuine ones, not aspirational projections with no underpinning
- Reason for sale — buyers always want to know. Give them a straight answer.
- Transaction overview — what’s being sold, indicative timeline, and deal structure preferences
The financials section is where most IMs succeed or fail. If the numbers are unclear, inconsistent, or unexplained, buyers assume the worst — and in my experience, their worst is usually worse than the actual truth.
How Long Should an IM Be?
For an SME in the $1M–$20M revenue range, 20–40 pages is normal. Smaller, simpler businesses sit at the lower end. Businesses with multiple revenue streams, significant assets, or complex operations need more depth.
Longer is not better. I’ve seen 80-page IMs that bury the actual business story under operational flowcharts and supplier contracts nobody asked for. The IM is not the data room — detailed contracts, employee files, and lease documents live there. The IM tells the buyer why they should proceed to due diligence.
One section, one page, roughly. The executive summary gets two.
Who Writes the IM — You, Your Broker, or Your Advisor?
Your advisor writes it, with your input. A corporate advisor or experienced business broker who’s worked on dozens of transactions will structure the document, write the narrative, and normalise the financials in a way that’s credible to buyers. You provide the raw material — the numbers, the context, the story.
If you write it yourself, two things tend to happen. First, you spend six weeks on it instead of two and it still isn’t quite right. Second, you overweight the things you care about (the history, the equipment, the industry award nobody outside your sector has heard of) and underweight the things buyers care about — customer concentration, recurring revenue, owner dependency.
A broker I worked with put it well: “The IM written by the seller reads like a love letter. The one written by the advisor reads like a credit application. Buyers prefer the second one.”
The Mistakes That Turn Buyers Cold
Glossing over owner dependency. If the business needs you to function — if you hold all the key client relationships, if revenue follows you around — buyers will find this out. Address it directly in the IM, with a concrete transition plan for how the new owner captures those relationships. Pretending it isn’t there just delays the conversation until due diligence, where it’s much harder to manage.
Inconsistent numbers. If the IM says $1.4M revenue but the tax returns say $1.2M, you’ll spend two weeks explaining the difference. Normalise the financials properly, document the add-backs, and present them clearly. Unexplained gaps invite suspicion.
Projections without foundations. Buyers don’t trust forward projections in an IM unless they’re grounded in specifics — a signed contract, a new product already trialled by an existing customer, a demographic trend with data behind it. Without that, leave projections out. An unsubstantiated growth chart makes you look like you don’t know the difference between hope and evidence.
The kitchen sink. Adding every certificate, award, and workplace policy document doesn’t make the IM look thorough — it makes it look like you don’t know what matters.
I saw a seller once include a complete copy of their ISO certification manual — forty-three pages, professionally bound — inside an IM for a logistics business. The buyer’s team spent an entire meeting debating whether it indicated operational excellence or the inability to distinguish between a sales document and a management system. They did proceed (the business was good), but it cost the seller a week of credibility before the real conversation could start.
When to Start Preparing Your IM
Earlier than you think. Most sellers start thinking about the IM when they decide to go to market. Experienced ones start six to twelve months before.
Why? Because preparing a good IM forces you to confront the things that will bother buyers — and those things take time to fix. Owner dependency, customer concentration, undocumented processes, messy financials. These are all problems you can address before going to market. Once you’re mid-process and a buyer uncovers them, you’re negotiating from weakness.
Preparing your business for sale and preparing the IM are two sides of the same coin. The process of writing the document is as valuable as the document itself. You’ll know more about your own business at the end of it — which is more than most sellers can say going in.
What the IM Is Not
It’s worth being clear about what the IM doesn’t do.
It’s not a substitute for the due diligence process. The IM prompts due diligence; it doesn’t replace it. A buyer who completes an IM review will then ask for the underlying evidence — financial statements, contracts, employee details, IP documentation. If the IM is accurate and well-structured, that process is manageable. If the IM was optimistic, due diligence becomes a renegotiation — over price.
It’s not a binding document. The IM includes representations, not warranties. The legal obligations come later, in the sale agreement. That said, misleading statements in an IM carry real risk under Australian consumer law, so it pays to have your advisor — and your lawyer — review it before it goes out.
If you’re thinking about selling your business and want to understand what your IM should say — and what your business is worth before you write it — start with our free valuation calculator or get in touch to talk through your situation.