When
seeking an investor or a buyer for your business, you’ll need to
have your business documents in order. What documents you need will
depend on who you’re appealing to and what you’re trying to do.
Two of the most popular when dealing with investors or buyers are a
Pitch
Deck and an Information
Memorandum.
Understanding
these documents begins with understanding their purpose and
intention. Only then can you determine if you will ever be in need of
both.
The
Pitch Deck Defined
A
pitch deck is a brief presentation, typically in a slide format like
PowerPoint or similar software, meant to overview a business
investment or purchase opportunity. These come in all lengths, and
some are more creative than others but, they tend to be very visual
as well.
The
Information Memorandum
According
to Corporate Finance Institute, “A Confidential Information
Memorandum
(CIM) is a document used in mergers and acquisitions to convey
important information about a business that’s for sale including
its operations, financial statements, management team, and other data
to a prospective buyer.” Unlike a pitch deck, this document tends
to more closely resemble a business plan in terms of its depth but,
it can appear in either a more visual or more text-based format.
The
Pitch Deck and Information Memorandum in Context of the Business
Lifecycle
Both
the pitch deck and information memorandum are used in what is a
commonly referred to as a pre-transaction stage of a business. Now,
businesses may undergo many transactions throughout their lifecycle.
For example, start-ups who go through several rounds of investments,
are conducting a “transaction” every time. Another common
transaction is the sale of a business.
So,
the information memorandum and Pitch
Deck are meant to solicit those interested in making a
transaction. It makes no different if that is an investment or a
sale, those are both transactions that typically begin with a
pre-transaction document.
How
Might Both Documents Be Used & Are They Used Together?
Knowing
which document is best and when, or if you should have both can be
pretty confusing. It depends on a variety of factors. These include
the size of your business, what you’re aiming to do, and your
potential audience to name a few. To make it even more confusing,
some people ever refer to an information memorandum as a pitch book.
Don’t
Go It Alone – The Power of Professionals
The
good news is you don’t have to figure this out on your own. In
fact, in order to maximize a potential investment or purchase of your
business, you shouldn’t. This is why the savviest of entrepreneurs
and businesspeople rely on professionals.
These
professionals tend to come in two forms. First, business advisors.
Advisors can help you determine who you should approach, how much you
should be asking for, and how you should be asking (i.e. what type of
documents are best. It will also come in the form of Professional
Business Plan Writers.
Often,
these will be two different companies/professionals but, every now
and again you find a great, highly knowledgeable, and well respected
company that can handle both aspects, like . Let them be your one
stop shop to determining the best course of action for your
transaction and your pitch deck or information memorandum.
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