Teaser and information memorandum: what each one is for
The teaser protects your identity; the information memorandum lets a buyer value the opportunity. Both must use numbers that match what the buyer will later verify.
The teaser
A short, anonymous profile, usually one or two pages. It summarises activity, region, scale, customers without naming them, normalised results and the investment case, without clues that would identify the company.
It should tell a buyer enough to decide whether to ask for more, but must not include addresses, brands, unique products or combinations of facts that give the identity away. In a niche sector, even "leading supplier in the East Midlands with 85 staff" can be enough.
The information memorandum
Also called an IM or a confidential information memorandum (CIM), it covers history, products, market, commercial model, team, operations, investment and financials. It is shared after an NDA has been signed and the party has been approved.
It should separate historical fact from forecasts and explain how normalised EBITDA, net debt, working capital and any pro forma figures have been calculated.
What it needs to show
Both documents should explain why the business is attractive without leaving out material facts. The numbers should reconcile to the accounts and the model, use comparable periods and keep definitions consistent.
A forecast needs operating assumptions, such as volume, price, headcount, capital expenditure and working capital, not just a growth rate. A buyer will review how the number is built as well as the number itself. Statements that turn out to be misleading can also create liability for the seller later, so keep the IM factual.
Common mistakes
Revealing the identity too early, mixing up enterprise value and the price for the shares, presenting adjustments without evidence, or using a generic template that does not explain the business. Also check which commercial or personal information needs restricted access.
Before it goes out
Check that periods, units and definitions match; that the document does not identify the company by accident; and that every important claim can be supported. You should approve the final version and the list of recipients.
