Glossary
Information Memorandum (CIM)
An information memorandum, often called a confidential information memorandum or CIM, is the document a seller gives to qualified buyers describing the business, its operations, and its financial performance in enough detail to support an offer. It is the primary sales document in an M&A process. At Treewalk, we write the financial half of these documents, and we write them knowing exactly which numbers a buyer’s advisor will attack first.
What goes in an information memorandum
A CIM is not a pitch deck and it is not a prospectus. It sits between the two: substantive enough that a buyer can form a view on price, controlled enough that it is released only under a non-disclosure agreement.
A complete memorandum covers:
- An executive summary and the investment case for the business
- Company history, ownership structure, and legal entity map
- Products, services, and how revenue is actually earned
- Customer base, including concentration and contract structure
- Operations, facilities, systems, and key suppliers
- Management team and the organizational structure post-sale
- Historical financial performance, normalized, typically two prior fiscal years plus the trailing twelve months
- Forecast financials with the assumptions stated openly
- Transaction structure and what the seller is looking for
The financial section is where deals are won or lost
Most of a memorandum can be written by someone who knows the business well. The financial section cannot, and it is the section every serious buyer turns to first.
The problem is that a memorandum presents adjusted earnings, and adjusted earnings are an argument, not a fact. Every add-back in that schedule is a claim that a cost will not recur under new ownership. A buyer’s advisor will test each one against documentation.
We have read memoranda where the adjusted EBITDA schedule had no supporting workpapers behind it at all. The seller could not explain how a figure was derived six weeks after publishing it to twenty buyers. That is not a presentation problem, it is a credibility problem, and it prices into every offer that follows.
Our rule is that nothing goes into the adjusted earnings schedule of a memorandum unless we could defend it line by line in a diligence call. The EBITDA normalization adjustments that survive that test are the ones worth presenting.
What a buyer does with your memorandum
Understanding the receiving end changes how you write it. Here is what actually happens to the document.
| Buyer step | What they are doing | What it means for the CIM |
|---|---|---|
| Screen | Deciding whether to spend time at all | The summary and earnings figure must be findable in the first pages |
| Model | Building a preliminary valuation | Revenue detail and margin history must be granular enough to model |
| Offer | Setting a letter of intent price | Adjusted earnings drives the multiple, so it must be defensible |
| Diligence | Testing every claim in the document | Anything that fails testing becomes a price reduction |
| Renegotiate | Repricing on what diligence found | Gaps between CIM and reality show up here as retrades |
The last row is the whole point. A memorandum that overstates gets punished later, with interest.
How we approach it
We write the financial sections and pressure-test the rest. In practice that means normalizing earnings before drafting rather than after, documenting every adjustment so it can be produced on request, presenting customer concentration honestly rather than burying it, and stating forecast assumptions plainly so a buyer can disagree with an assumption instead of distrusting the whole model.
This work usually sits inside a broader sell-side advisory mandate, because a memorandum built without diligence readiness behind it is a document waiting to be contradicted.
Frequently asked questions
Is a CIM the same as a teaser?
No. A teaser is a short, anonymous, one or two page summary sent to a wide list to generate interest, with no company name. The information memorandum is the full document, sent only after a buyer signs a non-disclosure agreement and has been qualified.
Is a CIM the same as a prospectus?
No, and the distinction matters legally. A prospectus is a regulated offering document for a public securities issuance with prescribed content and liability. A CIM is a private, contractual document exchanged under an NDA in a private M&A process.
Who writes it?
Usually a combination. The owner and management supply the operating narrative, and the advisor writes and validates the financial sections. On our mandates we take the financial content and review the rest for anything that will not survive buy-side due diligence.
How long should it be?
Long enough to support an offer and no longer. For the owner-managed businesses we work with, that is typically a few dozen pages. Padding a memorandum to look institutional makes the substance harder to find, and buyers notice.
Do I need one if I already have a buyer?
Often not in full. A single negotiated sale to a known buyer may only need the financial package and a short narrative. The full memorandum earns its cost when you are running a competitive process across multiple buyers.
Where to next
If you are preparing to take a business to market, the memorandum should be the last thing you write, not the first. Our transaction advisory services team starts with the numbers underneath it. Read sell-side advisory for how the full process runs. To talk it through, email Avnit Sekhon at avnit.sekhon@treewalk.com.
