lev-os Drafting Confidential Information Memoranda
When To Use
- Preparing sell-side marketing materials for a company sale, recapitalization, or strategic investment
- Creating a CIM (also called an Offering Memorandum or Information Memorandum) for distribution to prospective buyers under NDA
- Positioning a company's value story for a competitive auction or targeted outreach process
- Refreshing or updating an existing CIM for a new round of buyer marketing
Inputs To Gather
- Company overview: Legal name, headquarters, founding year, ownership structure, employee count, key locations/facilities
- Business description: Products/services, customer segments, end markets, go-to-market model, competitive positioning
- Historical financials: 3–5 years of income statements, balance sheets, and cash flow statements (audited preferred)
- Adjusted EBITDA bridge: Management adjustments with supporting detail (one-time costs, owner compensation normalization, pro forma adjustments)
- Growth initiatives: Organic growth levers (new products, geographic expansion, pricing), M&A pipeline if relevant
- Customer/revenue data: Top customer concentration, contract structure, recurring vs. non-recurring revenue split, retention/churn metrics
- Management team: Key bios, tenure, roles post-transaction (who stays, who transitions)
- Deal parameters: Indicative process timeline, transaction structure preferences (asset vs. stock), seller objectives, any carve-out complexities
- Market/industry data: TAM/SAM sizing, industry growth rates, relevant macro trends, competitive landscape
- Confidentiality constraints: Code name for the company, any information to redact from early-stage materials
Workflow
Confirm scope and deal context — Identify transaction type (full sale, majority recapitalization, minority investment). Clarify whether the CIM is for a broad auction, limited process, or single-buyer negotiation. Determine target page count and level of financial detail.
Build the executive summary — Draft a 1–2 page overview covering: investment highlights (3–5 bullet thesis points), business snapshot, key financial metrics (revenue, EBITDA, margins, growth rate), and transaction overview. This section sells the opportunity at a glance.
Draft the business description — Cover company history, mission, products/services in detail, value proposition, and operational model. Use clear sub-sections for each business line if the company is diversified. Include facility/operations overview with maps or diagrams where helpful.
Present the industry and market overview — Summarize addressable market size, growth dynamics, regulatory environment [VERIFY], and competitive landscape. Position the company within the market using frameworks buyers expect (market share, differentiation, barriers to entry).
Detail the growth strategy — Articulate 3–5 specific, credible growth drivers with supporting evidence. Distinguish between organic initiatives (product launches, pricing, cross-sell) and inorganic opportunities (tuck-in acquisitions, geographic expansion). Quantify the revenue/EBITDA impact where possible.
Compile the financial overview — Present historical performance (3–5 years), adjusted EBITDA reconciliation with footnoted adjustments, key financial metrics and KPIs, and a management case or projections if authorized. Include quality-of-earnings-style normalization where applicable.
Draft the management and employee section — Provide bios for senior leadership, organizational chart, and headcount breakdown. Note any key-person dependencies and post-close retention expectations.
Add supplementary sections as needed — Customer overview (anonymized if early-stage), technology/IP summary, real estate and asset detail, environmental or regulatory considerations [VERIFY].
Review and polish — Ensure narrative consistency, verify all figures tie to source financials, confirm adjusted EBITDA bridge foots, and apply professional formatting (table of contents, headers, page numbering, disclaimers).
Output
A complete CIM document structured as follows:
- Disclaimer / Confidentiality Notice — Standard language limiting liability, noting forward-looking statements, and restricting distribution
- Table of Contents
- Executive Summary — Investment highlights, financial snapshot, transaction overview
- Business Description — History, products/services, operations, facilities
- Industry Overview — Market sizing, trends, competitive positioning
- Growth Opportunities — Specific, quantified growth drivers
- Financial Overview — Historical performance, adjusted EBITDA bridge, key metrics, projections (if included)
- Management Team — Bios, org chart, post-transaction roles
- Appendices — Customer detail, asset lists, supplementary financial schedules
Quality Checks
- Financial accuracy: Every figure traces to source documents; adjusted EBITDA bridge balances correctly; historical and projected periods are clearly labeled
- Narrative consistency: Investment thesis in the executive summary aligns with growth drivers and financial projections throughout
- Adjustment transparency: Each EBITDA adjustment includes a brief explanation and magnitude; no unexplained or unsupported add-backs
- Customer concentration: Top 10 customer revenue percentages are disclosed; any customer representing >10% of revenue is flagged
- Confidentiality controls: Company code name used consistently; no identifying information leaks in early-stage versions; disclaimer page is present
- Market claims sourced: Industry stats cite specific sources (e.g., IBISWorld, Statista, trade associations) with dates [VERIFY]
- Regulatory / tax items flagged: Any jurisdiction-specific regulatory, environmental, or tax matters marked [VERIFY] for deal counsel review
- Professional presentation: Consistent formatting, no orphaned headers, tables fit pages cleanly, charts are labeled with units and time periods