Confidential Information Memorandum

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A confidential Information Memorandum is also called Confidential Business Review (CBR) and it is documentation mainly concerned with Mergers and Acquisitions(M&A). It provides information to potential investors or consumers regarding the sales operation, financial statements and management activities. It is basically a collection of the company’s profile information. The objective of preparing this is to evaluate the maximum value of any commodity or service. It comprises 10 sections for an effective portrayal of the information.

Executive Summary

It is a compiled summary of the entire contents of the documentation. It includes the vital goods and services offered by the company, a brief financial overview comprising details of profitability mainly, and the investment rationale.

Investment Thesis

It explains the investment rationale in detail, i.e., why would it be a great choice to invest in the target company. It includes details of strategies for market growth and expansion, corporate relations with leading companies, cost and production optimization procedures, and experience in market management for a national or international foothold.

Market Overview

This section is very vital for the investor to know as it discusses the market size and recent trends. Credible information sources are utilized to prepare the overview. It is important in understanding the current market and forms the appropriate strategies.

Company Overview

It basically contains the company details and description. It comprises the establishment of the company, business strategies, employee details, clients and consumers, revenue and gross income as well as recent affairs of the company.

Products and Services

This particularly comprises a minute analysis of the goods and services offered by the company and the routine business operations. It highlights the unique products offered and the target audience for each specific product or service offered. It portrays how well the company provides end-to-end service, in time, resource or price-constrained projects.

Revenue Profile

It uses different sources to provide accurate and credible data on the market revenue of the company. It can be divided according to the various business segments or locations or according to specific products or services. These are generally represented as pie charts for concise viewing.

Employee Profile

It displays the full profiles of all the key employees and can be segregated on the basis of their function, geographic location or qualifications. Generally, a pyramidal structure is followed while making this datasheet.

Consumer Profile

This is the second most important section of the whole documentation. It provides data on the potential consumers that the company would serve in the near future. It also throws light on the size of the consumer band and the contribution of the larger bands in an order of their individual contribution to the revenue of the company.

Financial Projection

It is the most important section of the documentation. This segment contains a detailed account of the past financial history of the company which serves as a basis for the future projections of profits or losses of the target company. This helps the investor decide whether to invest or not or how much to invest for better returns. On a general basis, it shows the positive portion of the company to make an attractive deal with the investor.

Management Structure

It mainly highlights the role of the key employees of the company, throwing light on their experience in the market. It also provides the hierarchy structure of the company and the decision taken and executed by the company.

Conclusion

This document helps the sellers or entrepreneurs to get a clear picture of their business operation as well as gives the investors an accurate valuation of the company in the current market. Thus, it is a very important document for both the sellers and buyers of the target company. 

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