The information memorandum presents the history, business model, market, competition, customers, organisation and employees. At its core are the financial figures for the last three to five years, the EBITDA adjustments and a business plan. It ends with a process letter setting out deadlines and requirements for the indicative offer.
For the seller, it is the most important sales document. It tells the equity story: why is the company growing, what makes it independent of the owner, and what opportunities does a new owner have? The better the IM is prepared, the more comparable and reliable the offers become.
Legally, care is required. Duties of care already arise in the negotiation phase under § 311(2) BGB (German Civil Code). False or misleading statements can later give rise to damages claims. A disclaimer in the IM is therefore common; the seller only makes binding commitments in the purchase agreement, through warranties.
Example
Hypothetical example: A machinery manufacturer with €18 million turnover reports EBITDA of €2.0 million in the IM. After adjusting for an excessive managing director salary (€0.15 million) and one-off litigation costs (€0.10 million), adjusted EBITDA is €2.25 million. On this basis, five interested parties submit indicative offers.
Sources
- Bürgerliches Gesetzbuch (BGB), § 311 Rechtsgeschäftliche und rechtsgeschäftsähnliche Schuldverhältnisse, Bundesministerium der Justiz / gesetze-im-internet.de