Below you will learn what a confidential information memorandum (CIM) is and how to create one to help raise money for your business or sell it. You will also learn that the term CIM is used synonymously with PPM, COM and OM.
What is a Confidential Information Memorandum?
A confidential information memorandum (CIM) is a document that discloses the terms, to prospective investors, of a potential investment in a company. It summarizes confidential information about a company or its owners to make the company attractive and obtain the maximum value during a financial transaction. It also discloses risk factors involved in making the investment. A CIM is sometimes also called a Private Placement Memorandum (PPM), a confidential offering memorandum (COM) or an offering memorandum (OM).
The confidential information memorandum is used to protect confidential information while providing enough information to generate interest from potential investors or prospective buyers. The CIM allows the company to gauge potential investor interest without revealing too much information that could harm the company if it were to leak out.
The CIM is most commonly used in the context of raising money for a business, whether through selling equity or debt securities.
When Do You Need a Confidential Information Memorandum?
If you are looking to raise investment for your company or sell your company, you will need a confidential information memorandum. The CIM is used to provide potential buyers or investors with an overview of the company while protecting confidential information.
The confidential information memorandum should be used when:
- You are looking to raise investment for your company.
- You are looking to sell your company.
- You want to gauge interest from potential buyers or investors.
- You want to protect confidential information about your company.
Who Can Prepare a Confidential Information Memorandum?
A confidential information memorandum can be prepared by the company’s management personnel, investment banker, or a business broker.
The individual completing this document will need to be familiar with the company and its sensitive information and needs the skills and experience to create a quality marketing document. It is their job to create a CIM that is attractive to potential investors or buyers while still protecting the confidential information of the company.
Download Our Confidential Information Memorandum Template
If you are looking to create your own confidential information memorandum (CIM) or private placement memorandum (PPM) [remember the two are synonymous], you can use a confidential information memorandum template. A template will provide you with a guide on how to format and structure your document. It will also help you to ensure that you include all of the necessary financial projections and information.
You can download our confidential information memorandum and PPM template which allows you to develop a professional CIM in hours or days, not weeks or months.
Click here to learn more.
Components of a Confidential Information Memorandum
There are several components that should be included in a confidential information memorandum. These components will provide potential investors or buyers with an overview of the company and its financial information. The components of a confidential information memorandum include:
Executive Summary
The executive summary should provide a brief overview of the company and its financial information. This section should include the company’s name, location, products or services, target market, competitive landscape, and growth potential.
Investment Terms
This section should include a description of the company, its business model, and the investment terms. It should outline the proposed investment terms for potential investors. This includes the type of security being offered, the price per share, and the amount of money being raised.
Market Analysis
This section should provide an overview of the company’s target market and how it competes in that market. It should also include a detailed analysis of the company’s sales and marketing efforts, as well as its competitive advantages.
Target Company Financials
This section should include a history of the target company’s revenue and profits, as well as a forecast for the future. It should also include a balance sheet, statement of cash flows, and income statement.
Products and Services
This section should provide a description of the company’s products and services, as well as any patents or other intellectual property.
Revenue Profile
This section should outline the company’s history of revenue, including information on its customers, sales channels, and average order size.
Personnel
This section should provide an overview of the company’s management team and employees. It should include biographies of the management team and a description of the company’s employee structure.
Customer Persona
This section should provide a description of the company’s ideal customer. It should include information on the customer’s demographics, needs, and pain points.
Financial Statements
This section should provide copies of the company’s financial statements, including its balance sheet, statement of cash flows, and income statement.
Download Our Confidential Information Memorandum Template
If you are looking to create your own confidential information memorandum (CIM) or private placement memorandum (PPM) [remember the two are synonymous], you can use a template. A template will provide you with a guide on how to format and structure your document. It will also help you to ensure that you include all of the necessary financial projections and information.
You can download our confidential information memorandum and PPM template which allows you to develop a professional CIM in hours or days, not weeks or months.
Click here to learn more.
OR, Let Us Develop Your Confidential Information Memorandum
Our investment banking and advisory firm can create your confidential information memorandum for you. We will make sure your CIM is sound and ready for investors so you can continue to focus on running your business. Over the past decade, our investment bankers have created CIMs for hundreds of entrepreneurs like you.
Click here to learn more about our Confidential Information Memorandum Services.
