Why the IM is the single most important document in your sale
Most New Zealand business owners spend years building something valuable, then summarise it in eight bland pages and wonder why qualified buyers go quiet. The Information Memorandum (IM) is the only document a serious buyer reads end-to-end before deciding whether to make an offer. It either does the heavy lifting of selling on your behalf, or it forces every prospect to start from a position of suspicion.
A good IM is not a brochure. It is a structured, evidence-led argument that this business is worth its asking price, is transferable, and is worth the buyer's time.
What buyers are actually looking for
By the time someone signs an NDA and asks for the IM, they have already decided the industry is interesting. They are now trying to answer three questions:
- Is this business as good as the teaser suggested?
- What are the risks I cannot see from the outside?
- Can I, specifically, run this and grow it?
Everything in the IM should serve one of those three questions. Anything else is noise.
The structure that works
After many NZ SME campaigns, the structure that consistently produces strong enquiry-to-offer conversion looks like this:
1. Executive summary (one page)
The asking price or price guide, headline financials (revenue, normalised EBITDA, owner hours), location, reason for sale, and what is included. If a buyer reads only this page, they should know whether to keep going.
2. The business at a glance
What it does, who it sells to, how it makes money. Avoid jargon. A buyer from outside your industry should understand your revenue model in two minutes.
3. History and milestones
Founding story, key inflection points, ownership changes. This is where credibility is built — buyers trust businesses that have weathered cycles.
4. Products, services and pricing
Mix of revenue by line, gross margin by line where possible, recent price changes and how customers responded. Do not hide low-margin lines; explain them.
5. Customers and contracts
Top customer concentration (anonymised), average customer tenure, churn, contract length, terms of trade. If a single customer is more than 20% of revenue, address it directly — buyers will discount harder for what you fail to disclose than for what you explain.
6. Suppliers and supply chain
Key suppliers, single-source risks, terms, any exclusive arrangements that transfer or don't.
7. Team and structure
Org chart, key roles, tenure, remuneration bands, contracts, restraints. Crucially: what the owner currently does, hour by hour, and what a successor would need to replace.
8. Premises, plant and IP
Lease summary (term remaining, rights of renewal, rent review mechanism), key plant, vehicles, software, registered IP, domains, trademarks.
9. Financials
Three years of P&L, normalised, with add-backs clearly listed and justified. A current-year forecast with the assumptions behind it. Balance sheet summary. Working capital profile.
10. The opportunity
This is where most NZ IMs go thin and where the best ones earn their multiple. Concrete, defensible growth levers: a second branch, an underdeveloped product line, a pricing gap, an export channel, a digital marketing spend the current owner has never tried. Buyers pay for the future, not the past.
11. Sale process
What is for sale (shares vs assets), timetable, how to register interest, what happens next.
Add-backs: the part everyone gets wrong
Normalisation is where credibility is won or lost. Buyers and their accountants will tear into your add-back schedule. Good practice in NZ:
- Vehicle: only the personal-use portion of a vehicle that will not transfer.
- Owner remuneration: adjust to a fair market salary for the role a working owner performs — do not zero it out unless you genuinely run the business with no input.
- One-offs: a legal dispute, a flood, a failed product launch. Document them with invoices.
- Discretionary: travel, entertainment, family on payroll who don't work in the business.
Add-backs you cannot evidence with a paper trail should not be in the IM.
Common omissions that kill buyer interest
- No clear reason for sale. "Retirement" or "next chapter" is fine — just say it.
- No mention of what the owner does day-to-day. Buyers assume the worst.
- Glossy growth claims with no underlying numbers. A line like "huge opportunity in Australia" with no market sizing or unit economics signals weakness.
- A messy lease. If your lease has 18 months left and no renewal, address it head-on with a plan.
- Hand-waved staff issues. Personal grievances, key staff close to retirement, dependency on a single technician — all need to be in the IM, framed honestly.
Format matters more than you think
A 30-page IM with consistent typography, real photography of the premises and team (where confidentiality allows), and clean charts converts dramatically better than a 50-page Word document with screenshots from Xero. Buyers are deciding whether to trust you with months of due diligence. The IM is your first proof point that you are organised.
What this means for you
Before you sign with a broker, ask to see a sample IM they have written for a comparable business — not a template, an actual document. The quality of that IM is the single best predictor of whether you'll end up with a competitive bidding situation or a single low offer.
General information only — get advice from your accountant and lawyer on your specific circumstances before disclosing financials to any buyer.