In the fast-moving business world today, communication should be clear and detailed. More so in cases where financial transactions of high value are involved. In closing business deals successfully, BMS Auditing appreciates the important role the Information Memorandums play. The article will discuss what an Information Memorandum is, why it's important, and how it will benefit your business.
What is an Information Memorandum?
Another very common term applied to the offering memorandum or investment memorandum is an Information Memorandum. It is a highly detailed document that gives your business overview to the prospective investor. It spells out the past, current, and future outlook in terms of performance for your company. It typically finds its application in raising large private equity capital, later-stage investments after initial rounds, divesting major assets, mergers and acquisitions, and the selling of an entire business.
Key Elements of Information Memorandum
To write a good Information Memorandum, it shall contain the following contents:
- Investment Highlights: This is essentially a two-page summary of the selling features of the business and the transaction proposed.
- Corporate Information: It involves corporate history, organizational structure, geographic spread, ownership, management team expertise, current business goals, and those planned for the future.
- Products and Services Offerings: Describe your company, its products, and services; the target customer; USPs; and associated risks.
- Performance Overview: Give a flavor of past and present financial and operational performance, key metrics, outlook for the future, and strategy for meeting targets.
- Market and Competition: Outline your market strategy and the potential of the target market; current, expected market share; competitor analysis; and drivers and barriers to the industry, plus applicable regulations.
- Proposed Transaction: Outline the transaction in which the investors will be investing, along with information about the capital raise, the amount to be raised, the stake available for sale, company valuations, and the intended use of funds.
What is the importance of an Information Memorandum?
An Information Memorandum holds various key purposes:
- Low-Cost Due Diligence: It gives an 'overview' of your business and transaction to your potential investor, and he can formulate an initial view about the potential deal at a low cost.
- Efficient Way to Educate Investors: The memorandum allows other investors to get an overview of the basic aspects of your business and saves the management team from investing extra time.
- Competitive tension can be maximized by providing the opportunity to more potential investors, thereby increasing the likelihood of better terms.
- It communicates a powerful vehicle that conveys all the key selling messages, making sure that they are not misinterpreted or overlooked.
- Industry and Business Education: It conveys the information to potential investors who might not be conversant with your industry, regulatory environment, competitive landscape, and geographic region.
Benefits of Addressing Information Memorandums
- Expanded Investor Pool: A far broader pool of potential investors can be targeted by putting all the information on the table up front.
- Reduced Management Time Impact: Less management time is spent individually educating each potential investor about the basic information of the business.
- Clear Articulation of Value: A document that provides an opportunity to clearly articulate the key selling messages of your business and the investment opportunity.
- Investor Education: It will educate less experienced investors who may have very limited initial knowledge about your business or industry.
Risks of Not Preparing Information Memorandums
- Increased Demands on Management Time: Where there is no proper document, this could mean that management has to explain the information to potential investors one by one.
- Higher Investor Costs: The cost of an investor to form a preliminary view of the business increases thereby reducing the number of participants.
- Missed Opportunities: There is a distinct possibility that not every interested investor would fully appreciate all the key selling points management wants to tell.
BMS Auditing: Your Partner in Preparing Effective Information Memorandums
At BMS Auditing, we specialize in helping businesses create compelling and comprehensive Information Memorandums. Our team understands the subtleties of different industries best and can assist you in writing a befitting value proposition statement for your business.
We will work closely with the management team to ensure that all relevant facets of your business are represented accurately in the document. Our goal is to assist you in creating an Information Memorandum that not only informs potential investors but also excites them about the opportunity your business presents.
Also, an Information Memorandum is not for one particular event alone; we encourage our clients to keep previous copies of Information Memorandums since they can prove very useful when there is a requirement for preparing summary information about the business in the future.
Maximize Your Business Potential with a Powerful Information Memorandum
A well-written Information Memorandum, even today, in this highly competitive business environment, can spell success for capital raises, mergers, acquisitions, or selling a business. It, in detail, persuasively communicates the overview of your business and helps in attracting the right kind of investors to achieve business aims.
BMS Auditing will help you understand this critical element of the business transaction. In a significant capital raise, merger, or selling your business, we will ensure your Information Memorandum clearly and effectively communicates the value and potential residing in your business.
Contact us at BMS Auditing Dubai today to know more about how we can assist you in preparing a potent Information Memorandum that sets your business apart from others and gives the right kind of investors.
