The Confidential Information Memorandum

A Confidential Information Memorandum (CIM) is a document created by your business broker. Offered to prospective buyers, it highlights your business strengths and the benefits of owning your business.

These documents aren’t used in the initial marketing process – they are highly confidential and contain sensitive business information (however all customer and employee data, and anything else proprietary will have the figures viewable with the names redacted). As such, CIMs are only offered to prospective buyers once they’ve signed a non-disclosure agreement (NDA).

CIMs go by many different names: You may see them referred to as Offering Memorandums (OMs), Information Memorandums (IMs), or any number of other names.

The purpose of a CIM is simple: you’re looking to provide enough information to prospective buyers (and their lenders) to whet their appetite while still keeping some elements of your business confidential. A good CIM can:

  • Help you find more prospective buyers
  • Increase the bids those buyers put in
  • Smooth the financing process (on the buyer’s end) by providing lenders with crucial information upfront

The CIM is a sort of hybrid document – it’s a marketing tool, a financial document, and a business document. The goal of the CIM is to increase the interest of buyers, increase the value of offers, and speed up the selling process.

What does a Confidential Information Memorandum contain?

CIMs will cover a range of topics pertaining to your business. They’re usually 25-50 pages long. Each CIM is different – they’re developed by brokers to highlight the unique strengths of your business. Generally, however, a CIM will cover the following topics:

  • A summary of your company (including the business concept and products/services offered)
  • Highlights/strengths (why they should be interested in purchasing your business)
  • Financial statements
  • Information about assets
  • Lease and property information
  • Org structure information (including roles and salaries)
  • Competitor analysis
  • Revenue Reports (by Month, by Year, by Customer)
  • Accounts Receivable & Accounts Payable summaries
  • Asking price
  • Contact information

The quality of your CIM depends heavily on the quality of your business broker. Jason Brice creates extremely detailed CIMs (undeniably more comprehensive than any other broker). They’re a reflection of the amount of research he does into every business he sells, offering prospective buyers insights well beyond the basic topics we’ve outlined here.

CIMs are mixed media documents

In sales, aesthetics matter. No one wants to read through a 40+ page wall of text. A great CIM will include images, tables, a neat layout, a table of contents, an appendix (where necessary), and other features designed to make the document easy to read all while highlighting the strengths of your business.

Data is key to CIMs

The goal of CIMs is to entice buyers into purchasing your business – or at least into seriously considering it. A great CIM will also provide lenders with key financial information to help prospective buyers secure financing.

Buyers and lenders care about the bottom line. They care about sales, growth, profits, losses, and any other financial figures you can imagine.

When it comes to CIMs, it’s not just about numbers – it’s about how you present them. Remember, CIMs are a type of marketing document. As such, you want a broker who will present data in a way that makes your business look like an attractive purchase.

Choose a business broker who will create a great CIM

Business broker services vary from broker to broker, but any broker you hire should be able to tell you how they would write up a CIM. They should have the ability to talk you through the documents and information they usually include in the CIMs they create, how they go about finding prospective buyers and obtaining NDAs before releasing the CIM, and answer any pertinent questions you may have.

Looking for a business broker with a reputation for creating highly detailed, high converting CIMs? Call Jason Brice.

The Confidential Information Memorandum