What an information memorandum looks like.
The information memorandum is the document a lender forms its credit view from. Most borrowers have never seen one before their first raise, so this page sets the real thing out section by section, with a specimen IM, built on a fictional borrower, to download.
The credit case, made in writing before anyone meets.
The IM is the adviser’s written case for lending to the borrower, with the model exhibits set into the page. It is issued under NDA to a controlled list of lenders and commits the borrower to nothing. The specimen carries every section of a full IM in 13 pages, where a live one runs forty to sixty. Each section is written to answer a question before the credit officer puts it.
The information memorandum, section by section.
| Section | The question it answers | What a credit officer checks |
|---|---|---|
| Executive summary | What is the credit, in brief? | That each headline figure and highlight is borne out in the sections behind it |
| The financing request | What is being asked for, and when? | That the facilities fit the uses and the timetable is realistic |
| Business overview | What drives the revenue? | That customer concentration is disclosed and recent trading bears out the story |
| Market | Is the demand durable? | That market claims are sourced and the company’s position is evidenced |
| Historical financial performance | How good are the earnings? | That the record ties to the audited accounts and each add-back is evidenced |
| Financial forecasts | Can the debt be serviced through a downside? | That every step-up has a driver and liquidity holds month by month, in the downside too |
| Facilities, security and covenants | What is the lender lending against? | That the security covers the debt and each proposed covenant leaves headroom |
| Management and ownership | Who runs the business, and who owns it? | That the finance function can report to a lender and key-person risk is covered |
| Risk factors | What could go wrong? | That each risk is stated plainly, with its mitigant |
| Basis of preparation | Where does each number come from? | That every figure traces to the accounts, management information, the model or a cited source |
Serviceability above everything, and candour about the risks.
A lender reads an IM for serviceability above everything: can the business generate the cash to pay the interest and repay the debt on schedule, through a downside as well as the plan. It reads for candour too, and prefers a borrower who found the risks first, since every risk surfaces in diligence either way.
The specimen IM, ready to read.
The specimen below is a Solon information memorandum on a fictional borrower, Northstar Components, raising a £10.5m refinancing. No real company, no live mandate, and nothing in it is an offer or advice. Read it the way a credit officer would: start with the executive summary and the funding ask, then test whether every question it raises is answered somewhere in the document.