Building an Information Memorandum for a 2026 sale

Updated 12 May 2026. The Information Memorandum (IM), also known as Confidential Information Memorandum (CIM), Pitch Book or Vendor Book, is the central document of any structured sale process. Between 25 and 50 pages long, distributed only after a signed NDA, it prepares the Letters of Intent (LOIs) that open the exclusive negotiation phase. Drafting mobilises an M&A advisor, an M&A lawyer and an accountant for a budget of EUR 35 to 110k on an SME deal. Cabinet Hayot Expertise in Paris handles the financial and tax components that buyers scrutinise most: normalised EBITDA, EBITDA bridge, management forecast and financial Vendor Due Diligence.

Position between teaser and LOI#

A structured sell-side process runs over 10 to 12 months with several documentary deliverables. Internal preparation (T0 to T+3 months) opens the sequence: data room built, Vendor Due Diligence launched, normalised EBITDA finalised. The teaser follows at T+3 months — a 2 to 3-page anonymous document addressed to a short list of buyers selected by the M&A advisor. Interested buyers sign an NDA (T+3.5 months), the sole ticket to the IM. The information memorandum is then transmitted (T+4 months), followed by an oral management presentation (T+5 months) and indicative LOIs (T+5.5 months). Exclusivity negotiation, buyer due diligence, SPA and closing complete the process between T+6 and T+12 months. Our analysis of the definitive sale agreement details the SPA-closing phase.

Volume, format, audience#

A well-calibrated IM fits in 25 to 50 PDF pages, with restrained design, quantified charts and a strictly buyer-oriented narrative. The target audience is not retail: private equity funds, industrials in build-up mode, occasionally family offices and, less often, MBO/MBI managers. Each profile reads the IM through a different lens — EBITDA multiple for a fund, synergies for an industrial, structured financing for an MBO. The document must anticipate these multiple readings without diluting the message.

Difference with a startup pitch deck#

An M&A IM and a startup pitch deck are distinct objects. The IM describes a mature business with positive EBITDA, 5 years of audited history, sold on a multiple applied to a normalised financial aggregate. The pitch deck describes a growth trajectory, often with negative EBITDA, and a pre-money valuation grounded in market assumptions. The IM runs 25 to 50 PDF pages; the pitch deck 10 to 15 slides. Tone differs: sober and financial for the IM, narrative and visionary for the pitch.

One-page pitch and highlights#

The first two or three pages of the IM concentrate the go/no-go decision. A one-page pitch articulates three questions: who we are, why we are selling, why buy us. The next page synthesises highlights: market positioning, defensible competitive advantages, addressable market size, team quality, proprietary technology or IP. This synthesis must be readable in isolation by an investment committee and trigger a go/no-go in under 10 minutes.

KPIs to highlight#

The executive summary opens a KPI table over 3 to 5 years: revenue, reported EBITDA, normalised EBITDA, gross margin, organic growth, recurring customers, working capital in days, net debt. For an SME between EUR 5 and 30 million revenue, a buyer expects a normalised EBITDA margin above 12 percent and organic growth of at least 5 to 8 percent per year to enter the upper sector multiple band.

Why you are selling#

The "reason for sale" section is read with the closest attention. Preparing retirement, refinancing a holding, exiting a legacy shareholder, accelerating development with an industrial partner — all of these are admissible if named and consistent. Silence or evasion raises the risk premium applied by the buyer. The retirement scenario also opens a specific tax mechanism: the enhanced allowance of article 150-0 D ter of the French Tax Code (CGI), framed by the BOFiP, which can reach EUR 500,000 of exempt capital gain under conditions.

Legal form, capital, shareholders#

This section lays the fundamentals: corporate form (SAS, SA, SARL), share capital, fully diluted cap table, existing shareholder agreements (pactes, BSPCE, BSA, AGA). Buyers scrutinise drag-along and tag-along clauses, as well as the seller's non-compete undertakings. Any inconsistency between the bylaws filed at the commercial registry and the situation described in the IM erodes credibility.

Headcount and organisation#

Average full-time equivalent headcount, age pyramid, three-year turnover rate, payroll mass and applicable collective agreement must appear. The IM also specifies geographic footprint (head office, production sites, sales branches) and associated commercial leases.

Certifications and accreditations#

Every ISO certification, sector approval, administrative authorisation or regulatory licence weighing on the activity is listed with date of issue, expiry date and certifying body. On regulated markets (healthcare, finance, defence, food), a missing or expired authorisation is a deal breaker.

TAM, SAM, SOM and growth drivers#

Market sizing relies on three classical aggregates: TAM (Total Addressable Market), SAM (Serviceable Available Market), SOM (Serviceable Obtainable Market). For a French SME, the SAM typically represents the national or regional fraction of the market; the SOM, the share achievable within 3-5 years given the commercial portfolio and production capacity. Growth drivers — regulation, demographics, digitalisation, energy transition — are dated and underpin the forecast.

Competitor mapping and barriers to entry#

A two-axis competitive mapping (price vs service level, size vs specialisation) is enough to visually position the business. For each identified competitor, the IM mentions revenue, headcount, geographic coverage and positioning. Barriers to entry — initial capital required, accreditations, installed base, brand, patents — are named without overstatement.

Credible public sources to cite#

Market figures are sourced: INSEE, Eurostat, public Xerfi studies, parliamentary reports, sector publications. Inventing figures or "rounding" them is unacceptable in due diligence: a professional buyer always verifies. Cabinet Hayot Expertise favours explicit citation with link and date, consistent with the financial information best practices promoted by the AMF.

Product-service catalogue and positioning#

The product-service catalogue is presented in a table: family, sub-family, revenue share, gross margin, sales cycle duration, level of recurrence. Positioning (premium, mid-market, low-cost) is stated clearly. The 18-36 month R&D roadmap, registered patents and trademarks complete the section. Intellectual property (IP) transferred must be listed exhaustively — any IP remaining in the seller's personal estate must be flagged and assigned in parallel to the SPA.

Customer mix, top 10, dependency#

The customer mix is presented by segment (B2B/B2C, size, geography), with a focus on the top 10 customers (anonymised as "Client A, B, C…" if confidentiality requires). Rule of thumb: the top 5 customers should not exceed 25 percent of revenue. Higher concentration justifies a valuation discount or an earn-out clause spread over 24-36 months. Net retention rate, churn and average relationship duration inform on portfolio quality.

ARPU, average ticket, sales cycle#

For a recurring model (SaaS, managed services, subscription), the IM displays ARPU, MRR, ARR, NRR and CAC payback. For a transactional model, it documents average ticket, purchase frequency, basket size and unit margin. These metrics are reconciled with statutory accounts to avoid any discrepancy that would erode document credibility.

3-5 years of historical figures#

The financial section is the most scrutinised. It opens with a reformatted income statement over 3 to 5 years: revenue, gross margin, EBE/reported EBITDA, normalised EBITDA, operating profit, net income. A synthetic balance sheet presents fixed assets, working capital, cash, net debt and equity. A cash flow table reconciles CAF, working capital change, CAPEX and financial flows. Associated valuation methods are detailed in our guide to business goodwill valuation.

Normalisation adjustments and EBITDA bridge#

Normalised EBITDA adjusts reported EBITDA to neutralise non-recurring or non-transferable items. Typical adjustments: excessive owner compensation (vs market salary for an equivalent role), free benefits in kind (housing, vehicle, personal expenses), synergies with other companies of the owner, exceptional charges (litigation, restructuring, tax audit), exceptional subsidies, capitalised vs expensed R&D, exceptional provisions. The EBITDA bridge presents the cascade from reported EBITDA to normalised EBITDA, adjustment by adjustment, quantified and documented. A transparent bridge is worth more than an inflated EBITDA without justification: any undocumented adjustment will be stripped out in buyer DD and will lower the price.

Forecast and assumptions#

The 3-5 year forecast is presented in two versions: a management version (the plan defended by leadership before its board) and, sometimes, a conservative version (the safeguarded minimum). A pure "vendor-friendly" forecast, disconnected from historical trajectories, loses all credibility. Each assumption — organic growth, average price, churn rate, productivity gain, CAPEX — is explicit and quantified. The 24-month cash plan and sensitivity analysis (on the 3 main levers) complete the section.

Owner profile and succession plan#

The selling owner's profile and future role condition the deal structure. Three standard scenarios: continuity (the owner stays 12-24 months with linked earn-out), transition (the owner accompanies 3-6 months then exits), full exit (the owner leaves at closing). Each scenario impacts price, timeline and liability warranty. The management team (sales director, CFO, production director, HR director) is presented with summary CVs and proposed retention plan (Management Package, retention BSPCE, signing bonuses).

Honestly disclosed risks#

A credible IM names its risks. Customer concentration, single supplier dependency, high claims rate, ongoing litigation, probable URSSAF reassessment, regulatory fragility, owner dependency: all these must appear, with a mitigation plan. Hiding a risk is counter-productive — it will surface in buyer DD and cost more in discount than if disclosed upfront. GDPR and CNIL compliance on processed data are systematically verified in DD; the IM mentions the DPO, processing records, legal basis (article 6 GDPR) and processor agreements (article 28 GDPR) linked to the data room.

Process timeline and Management Package#

The timeline proposes a clear sequence: LOI sending at T+45 days, short list selection at T+60, exclusivity at T+90, buyer DD over 60 days, SPA negotiation, signing then closing. The Management Package — percentage of capital or BSPCE allocated to key managers post-sale — is announced from the IM, reassuring financial buyers on retention.

Essential NDA terms#

No IM is distributed without a signed NDA upstream. The standard NDA covers non-disclosure, non-solicitation (employees and customers), no-poach, return or destruction of documents at end of process, confidentiality period typically 3 to 5 years, sanctions through liquidated damages or actual loss. Article 1240 of the French Civil Code grounds civil liability in case of breach, alongside contractual penalty clauses. The M&A lawyer drafts and negotiates the NDA upstream of the teaser.

Buyer qualification before distribution#

The M&A advisor qualifies each buyer before transmitting the IM: verified financing capacity, consistent sector interest, absence of conflict (for example a direct competitor to exclude). A signed NDA does not eliminate leak risk: it reduces probability and enables court action if the leak is traced. Limiting distribution to 10-20 qualified buyers is preferable to circulating 50 anonymous files.

Sanctions and leak risks#

A pre-closing information leak can cost dearly: team demotivation, competitor solicitation, customer loss, deteriorated banking conditions. NDAs provide liquidated damages (EUR 50 to 500k) and the possibility of pursuing actual damages. The French Monetary and Financial Code also strictly frames solicitation and private placement: transmitting an IM to an unqualified investor without respecting these rules exposes to AMF sanctions.

Independent pre-distribution audit#

Vendor Due Diligence (VDD) is an independent audit commissioned by the seller, typically with a third-party audit or advisory firm, delivered as a synthetic report transmitted to selected buyers. It covers financial VDD (EBITDA analysis, working capital, revenue quality), tax VDD (dormant tax risks, URSSAF disputes), HR VDD (labour court risks, collective compliance) and, more rarely, legal and operational VDD.

EUR 30-150k cost depending on size#

VDD cost ranges from EUR 30 to 150k depending on company size and scope. For an SME between EUR 10 and 30 million revenue, a financial and tax VDD runs around EUR 40-70k. For a consolidated group between EUR 50 and 150 million, the budget climbs to EUR 100-150k. Cabinet Hayot Expertise handles financial and tax VDD in coordination with the M&A advisor.

Credibility advantage and deal-breaker unblocking#

VDD performs three major economic functions: it accelerates buyer DD phase (often reduced from 60 to 30 days), reinforces dossier credibility (figures already audited by an independent third party), and identifies deal breakers upstream (insufficient provision, tax reclassification, dormant litigation) so they can be addressed before the process opens. It never replaces the buyer's DD, but it frames it.

M&A advisor, lawyer, accountant#

Three professions coordinate. The M&A advisor or boutique investment bank pilots IM drafting, manages the buyer short list, organises the management presentation and negotiates LOIs: fees combine a monthly retainer (EUR 5-15k) and a success fee (1-3 percent of the sale price). The M&A lawyer drafts the NDA, secures shareholder agreements, prepares the SPA template and ensures regulatory compliance (AMF, French Monetary and Financial Code, GDPR): EUR 10-30k for the pre-LOI phase. The accountant prepares normalised EBITDA, the bridge, the forecast, financial and tax VDD, and coordinates with statutory auditors: EUR 5-20k on an SME.

Total EUR 35-110k for an SME#

The total envelope to prepare a complete IM on an SME ranges from EUR 35 to 110k, excluding external VDD. VDD adds EUR 30 to 150k depending on scope. This budget may seem high but, relative to the sale price (often EUR 5 to 30 million for an SME), it represents 0.5 to 2 percent of enterprise value — an investment that pays for itself as soon as it avoids a 5 to 10 percent discount in buyer DD. Our analysis of business goodwill valuation details the valuation methods used in the IM financial section.

Coordination of stakeholders#

The M&A advisor pilots the calendar and production cadence. The lawyer secures clauses and compliance. The accountant guarantees the quality of the figures. A weekly coordination meeting between the three stakeholders avoids dissonances between versions and accelerates iterations. Cabinet Hayot Expertise integrates this governance on the financial and tax component, in line with our outsourced CFO offering.

The trade-off — exhaustive or targeted IM#

Every seller arbitrates between an exhaustive IM (50 pages, 6 months of preparation, wide distribution) and a targeted IM (25 pages, 3 months of preparation, short list of 5-10 buyers). The exhaustive IM maximises competitive exposure and therefore price, but expands leak risk. The targeted IM preserves confidentiality and accelerates the timeline, at the cost of less competitive tension. The right choice depends on sector sensitivity, competitor positioning and the owner's ability to maintain operational pressure during the process. For businesses where the seller's identity is a strategic asset (consulting firm, creative agency, personal brand), the targeted format is generally preferable.

The underestimated risk — overpromising and credibility loss in DD#

The costliest mistake is overpromising. A forecast built "to sell" — with accelerated growth at T+1, expanded margins, minimised CAPEX — will systematically be dismantled in buyer DD. The consequence is twofold: a price discount on the multiple (sometimes 1-2x EBITDA) and an earn-out renegotiation that destroys exit cash. Cabinet Hayot Expertise advocates a sincere management forecast, accompanied by clear sensitivity analysis. Credibility is the seller's most precious asset: an honest, well-sourced and well-quantified IM beats a "marketing" IM that collapses in DD.