The Information Memorandum (CIM)

What is the Information Memorandum and what is it for?

The Information Memorandum — also known as a Confidential Information Memorandum (CIM) or, in the Spanish market, as Cuaderno de Venta — is the central document in any business sale process. It is delivered to prospective buyers following the execution of a non-disclosure agreement (NDA) and constitutes the foundation on which valuation and negotiation are built.

Its nature is dual, and it is important to understand this from the outset:

• On one hand, it is a marketing instrument designed to present the business in the best possible light in order to maximise the sale price.
• On the other hand, it is a risk management tool, because every piece of information it contains will be subjected to rigorous scrutiny during due diligence. A CIM containing inaccurate or inflated data does not accelerate the transaction — it destroys it at the final stages, when the buyer uncovers the discrepancies and responds with aggressive price adjustments or walks away entirely.

The CIM is neither a commercial brochure nor a summary of annual accounts. It is a document of a financial and strategic nature that must withstand the analysis of M&A and Transaction Services teams acting on behalf of professional buyers.

This document is fundamental for prospective buyers and investors to decide whether to advance in the negotiation. Its content and structure may vary depending on the objective — a full or partial sale, an investor search or a capital raise — and it must be tailored to the sector and economic context in which the company operates, as these factors influence both its valuation and its appeal to buyers.

Target audience: Strategic Buyer vs Financial Buyer

One of the most common mistakes in drafting a Confidential Information Memorandum (CIM) is writing it without a clear picture of who will read it. In any competitive process, two buyer profiles coexist with fundamentally different motivations, and a well-crafted CIM must satisfy both:

The CIM within the sale process

The CIM is not the first point of contact with a prospective buyer. It forms part of an ordered sequence in which each document qualifies the buyer's interest before more sensitive information is shared:

The teaser is the step that precedes the CIM: it describes the business in generic and anonymous terms, without disclosing its identity. Only prospective buyers who demonstrate genuine interest and execute the NDA are granted access to the full document. Distribution must always be managed through a Virtual Data Room (VDR), which allows the adviser to track who accesses the document, which sections attract the most attention, and to revoke access at any point.

Sharing the CIM without an NDA, or without first qualifying the buyer's genuine capacity and intent to acquire, is one of the most serious errors in a poorly managed process. Sensitive information can reach competitors, employees or the market at large, with consequences that are difficult or impossible to reverse.

Essential Content of the CIM

Executive Summary: the investment thesis

This is the most widely read section and, therefore, the most critical. In one to two pages it must answer the question every buyer has from the very first moment: why acquire this business today? The most powerful element is the Investment Highlights — between four and six factual, quantified points that immediately convey the opportunity's appeal: a dominant and verifiable market position, long-term recurring contracts with blue-chip customers, proprietary technology that is difficult to replicate, an autonomous management team with post-closing commitment, or concrete growth levers not yet activated. The executive summary is not a table of contents: it is a sales pitch that must work as a completely standalone piece.

Market analysis and business model

The CIM must define the target market using precise metrics — TAM (total addressable market), SAM (serviceable addressable market) and SOM (serviceable obtainable market) — and cite reputable external sources to validate projected growth rates. The competitive analysis should be honest: mapping the company's position against key competitors in terms of price, quality and service is not a weakness — it is a sign of analytical maturity that builds credibility. The business description section covers products and services, the operating or production process, intellectual property and sustainable competitive advantages.

The customer section deserves particular attention. Concentration of more than 30–40% of revenue in the top five customers is the most frequently encountered red flag in any M&A process: it gives those customers excessive negotiating power and increases the systemic risk of the business. Where this exists, the CIM must contextualise it with historical retention data and present the diversification strategy in progress. Sophisticated buyers look beyond concentration and assess revenue quality through specific metrics:

Management team and organisational structure

In 2026, senior management talent is a critical valuation asset. The CIM must demonstrate that the business operates with genuine managerial autonomy. Excessive dependence on the founder-owner is the most frequent risk factor in Spanish SMEs and directly penalises the multiple offered. Where it exists, it must be presented alongside a credible transition plan — a buyer who discovers it during due diligence without having seen it in the CIM will respond with a price reduction, not with understanding.

If the business cannot function without the founder for six months, the buyer will find out and it will be reflected in the offer. It is far better to address this proactively in the CIM with a documented transition plan than to leave it as a surprise at the final stage of the negotiation.

Business plan and financial projections

The business plan is the section that most influences the multiple a buyer will assign. The objective is not to present optimistic projections, but to demonstrate — with rigour and data — the available growth levers and the logic behind each assumption. A compelling business plan includes financial projections for three to five years (P&L, EBITDA and free cash flow), identification of growth levers with their quantified impact, required investment (CapEx) and its expected return, and a sensitivity analysis across different execution scenarios.

'Hockey stick' projections — explosive growth following years of stagnation, without a coherent investment plan to support them — are the greatest generator of scepticism among professional buyers. If projected profits are set to surge, the associated costs (CapEx, headcount, marketing) must also grow proportionally and in a justified manner. A projection without an investment plan to underpin it does not generate credibility: it generates doubt.

Financial information and normalised EBITDA

This is the section most closely scrutinised by M&A teams and the buyer's advisers. It must be complete, consistent and readily auditable. Standard content includes audited annual accounts for the last three to four financial years (P&L, balance sheet and cash flow statement), a breakdown of revenues by business line and geography, the net financial debt position, working capital requirements and historical and projected CapEx.

Normalised EBITDA is the central metric on which the entire valuation pivots. Reported EBITDA rarely reflects the true economic reality of a family-owned or owner-managed business. Normalisation seeks to show the profit-generating potential of the business under purely professional management, adjusting items that distort the underlying picture. The most common adjustments are: excess owner remuneration above market rate, personal expenses charged to the company, non-recurring revenues, one-off restructuring costs, and the treatment of operating leases under IFRS 16. Each adjustment must be documented and technically justified — Transaction Services teams will examine them one by one. Alongside EBITDA, the buyer will analyse free cash flow conversion (FCF/EBITDA), normalised working capital, net financial debt and the evolution of the gross margin.

New valuation factors: ESG, AI and Cybersecurity

A CIM that fails to address sustainability, technology and cybersecurity risks being dismissed by institutional buyers or having its valuation penalised. These factors have moved beyond reputation management to become hard financial variables with a direct impact on the valuation multiple.

ESG criteria are now quantifiable: leading consulting firms estimate that a 10-point improvement in ESG Score can lift the EV/EBITDA multiple by between 0.4x and 0.7x. For a company with €10 million of EBITDA, that translates to between €4 million and €7 million of additional transaction value solely through multiple expansion. Major investment funds must comply in 2026 with the Sustainability Reporting Standards (SRS) and with European anti-greenwashing directives, which directly excludes companies without a documented ESG policy from their investable universe.

On the technology side, the CIM should explain how the company leverages AI and automation to optimise its processes. On cybersecurity, technology reviews now represent the most time-consuming and costly element of due diligence in a growing proportion of transactions. A summary of the information security architecture and GDPR compliance is essential to prevent this factor from stalling the closing or triggering last-minute price adjustments.

Errors that destroy transaction

The same patterns of failure appear repeatedly in processes that do not close or close significantly below their potential value:

• Inflated or technically unjustified normalised EBITDA: when identified in due diligence, it leads to aggressive renegotiation or process collapse at the worst possible moment.
• Creative accounting or window-dressing of figures: Transaction Services teams at the Big Four always detect it. The resulting loss of credibility is terminal for the deal.
• Hockey stick projections without a coherent investment plan: buyers systematically penalise these if there is no CapEx to support them.
• Concealment of material risks (litigation, contingent liabilities, customers at risk): transparency generates more trust than omission. Risks uncovered in due diligence that were absent from the CIM are the most damaging to the negotiation.
• Owner dependency without a transition plan: a direct discount factor on the multiple offered.
• Data inconsistencies across sections of the document: they generate distrust and delay the process with unnecessary clarification requests.
• Distributing the CIM without an NDA or without qualifying the buyer: risk of sensitive information reaching competitors or the market, with consequences that may be irreversible.

Why prepare the Information Memorandum (CIM) before going to market

The single most important recommendation for any business owner contemplating a sale is to begin preparing the CIM at least six to twelve months before launching the process. This lead time is not administrative — it is strategic. The process of drafting the CIM acts as a preventive due diligence exercise: it allows the seller to identify and correct financial inconsistencies before exposing them to the market, to professionalise the management team with enough time for the changes to be credible, to resolve tax or legal contingencies that would inevitably surface in due diligence, and to build the customer metrics (churn, LTV, CAC) that any serious buyer will demand.

Companies that go to market without adequate preparation typically close 15–25% below their potential value — or fail to close at all. A well-prepared process, with a rigorous CIM and a specialist adviser generating competition among buyers, is the highest-return investment in the entire transaction.

A well-crafted CIM in a competitive process can be the difference between a 4x and a 6x EBITDA multiple. For a business with €2 million of EBITDA, that is a €4 million difference in the final price.

The value of a specialist M&A Adviser

A specialist M&A financial adviser brings to the process something the internal team cannot replicate: the buyer's perspective. They see the business from the outside, identify strengths that the internal team takes for granted and risks that familiarity renders invisible. They know which arguments resonate with trade buyers and which with private equity funds, and they tailor the message accordingly. They calculate the adjusted EBITDA using a technically defensible methodology, anticipate due diligence objections and design the competitive process by identifying the buyers with the strongest strategic motivation — those who will pay a premium. They also act as a buffer in the negotiation, preserving value and the relationship between the parties at the moments of greatest tension.

Preparing the CIM internally, without a specialist adviser, is one of the most common patterns in transactions that fail to close or close well below their potential. Not because the internal team lacks capability, but because it lacks the external perspective, the experience in competitive processes and the time required to do it properly while running the business day to day.

Conclusión

The CIM is the document that defines the playing field for the entire negotiation. In the current transactional environment (2025–2026), it has evolved into a complex instrument that must integrate rigorous financial analysis, quantifiable ESG factors and technological maturity, and withstand a level of scrutiny that is without precedent. Excellence lies in weaving a persuasive narrative over an unassailable data foundation.

Begin preparation six to twelve months in advance, conduct a preventive due diligence exercise and work with an adviser who understands the buyer market.

If you are considering the sale of your company or seeking an investment partner, Maraz Corporate Finance can help you design and execute the full process — from the CIM through to closing — maximising value at every stage.

Javier de Rojas Roca de Togores

Partner - Maraz Corporate Finance