What to look out for in the Information Memorandum (IM)?

The IM is the key sales document for any business for sale. It should contain the answers to many of the questions you will have regarding that business once you’ve reviewed the teaser document for it.

The following 20 point checklist will help you assess the main areas you will wish to examine, as follows:

• Directors – age, role responsibilities, shareholding percentage / any indication that they will retain equity on sale or stay with the business longer term ?
• Customers – any reliance (over 50% of turnover) on any one customer ? / is there a good spread across a range of customers ? also, any geographic focus or reliance ? / are there any long term contracts in place for supply of the company’s products or services ?
• Suppliers – ideally a broad spread, possibly different ones for different products purchased
• Ebitda – what is the trend ? any one-off poor performance years or even loss making years ?
• Add backs to profit to derive ebitda – any “unusual” add backs or any particularly large items ?
• Balanc