Process
Information memorandum (IM)
The information memorandum is the document lenders read to decide whether to lend and at what price, and it is not the same document as the one used to sell a company.
Also called CIM · confidential information memorandum · lender pack · debt IM · offering memorandum
The two documents answer different questions. A lender is underwriting the downside; an acquirer is buying the upside.
| Section | Where the emphasis sits |
|---|---|
| Growth and upside narrative | Central to a sale |
| Business and market overview | 40–60 on the scale |
| Normalised earnings | 55–75 on the scale |
| Cash conversion and headroom | What credit underwrites |
| Security and structure | Debt-only |
Relative emphasis, not measured data.
Why a debt IM is a different document
A sale document is written for someone deciding what a business is worth. A debt document is written for someone deciding whether it can pay them back. Those readers want different things, and a pack that confuses them tends to fail with both.
An acquirer is buying the upside, so the story leads. A credit committee is underwriting the downside, so the question behind every page is what happens in a bad year. Reusing a sale CIM to raise debt reads to a lender as evasive even when nothing is being hidden, because the document simply does not answer their question.
What it has to contain
The business and how it makes money. Normalised earnings with every adjustment explained and evidenced rather than asserted. Historical cash conversion, because EBITDA that does not become cash is worth little to a lender. The proposed structure, purpose of funds and sources and uses. Security available and what already sits against it. Management, with depth below the founder addressed directly.
Then the part borrowers most often leave out: sensitivities. A lender will model a downside whether or not you give them one. Providing it, with the covenant headroom it implies, moves the conversation from whether the business is fragile to how it behaves under stress.
The IM is the second document out, not the first. The teaser tests appetite before anyone knows whose business it is.
| Stage | Timing |
|---|---|
| Teaser out | Weeks 1-2 |
| NDAs signed | Weeks 2-3 |
| IM + model | Weeks 3-4 |
| Indicative terms | Weeks 5-7 |
| Credit approval | Weeks 9-11 |
Illustrative sequence for a £3-15m raise. Timings vary with complexity and lender responsiveness.
What sits alongside it
The IM is one item in a pack rather than the whole of it. A competitive process usually goes out with an integrated financial model covering three years of history and three to five of forecast, monthly for the first year. Lenders rebuild the model in their own format regardless, so the value of yours is that it fixes the definitions everyone argues from.
Alongside those sit a normalisation bridge reconciling statutory EBITDA to the adjusted figure line by line, a sources and uses table, aged debtor and creditor analyses, a customer concentration schedule, and the existing security position. Where the raise funds an acquisition, the target's financials and the purchase agreement's key terms join the pack.
A borrower who supplies these upfront compresses diligence by weeks. One who supplies them piecemeal, in response to questions, extends it and signals that the numbers were not ready.
The teaser, and why it comes first
Before the IM goes out, lenders see a teaser: a short anonymous summary that lets them say yes or no to looking properly without knowing whose business it is. It protects confidentiality while a shortlist forms, and it lets a process test appetite across a wide field before narrowing.
The sequence matters for the borrower. Approaching one lender with the full pack forecloses the competitive tension that sets pricing. Running a teaser first means the IM lands with several credit teams at once, and their terms can be compared. It also protects against the situation where a business becomes known in the market as having been shopped and declined.
How a lender consumes it
The IM is not the document that approves your loan. It is the raw material for a credit paper written internally by the originator, and that paper is what a credit committee votes on. Understanding this changes how the IM should be written.
The originator is, in effect, your advocate inside their institution, and they are assembling an argument under their own credit policy. A pack that gives them the evidence in the shape their policy requires makes their job straightforward. One that leaves gaps forces them either to go back with questions, which costs time, or to write the paper with caveats, which costs pricing.
This is also why the sections a borrower polishes least are read hardest. Market overview and company history are largely skimmed. The normalisation bridge and the downside case are read line by line, because that is what the credit paper is built on.
What a credit committee spends its time on. The sections borrowers polish least are the ones read hardest.
| Section | Attention |
|---|---|
| Market and history | Skimmed |
| Management depth | 35–60 on the scale |
| Customer concentration | 50–75 on the scale |
| EBITDA adjustments | Line by line |
| Downside sensitivities | The credit case |
Relative attention, not measured data.
Who writes it, and what that signals
At £3-15m the realistic options are the finance director, the company's accountants, or a debt adviser running the process. Each produces a recognisably different document, and lenders can tell.
A finance-director pack is usually strong on operational detail and weak on structure and market context, because the author has not seen fifty of these. An accountancy pack is usually strong on the numbers and lighter on the credit argument. An adviser-run pack should be organised around the lender's decision rather than the company's history, and should anticipate the diligence questions rather than wait for them.
The signal matters as much as the content. A pack that arrives complete, with a model that ties and adjustments that are evidenced, tells a credit team the borrower is organised, and organised borrowers get better terms.
The weaknesses that cost pricing
Add-backs without evidence are the most common. A lender who cannot verify an adjustment strikes it out, which lowers EBITDA, which lowers leverage capacity, which shrinks the facility. On a 3.0x structure, every £100k struck out removes about £300k of borrowing.
Vague customer concentration is the next. If the top-customer share is uncomfortable, saying so with the contract length and history attached is worth more than leaving credit to discover it. A forecast that hockey-sticks without an operational explanation invites the lender to underwrite the historic run rate instead. And a model that does not tie to the accounts undermines every other number in the pack.
The subtler failure is silence about a known weakness. Diligence surfaces it eventually, and surfacing it late costs more than surfacing it early, because a lender that has found one thing you did not mention starts looking for the second.
Confidentiality and what it does not do
The IM goes out under an NDA, and the NDA is worth reading rather than signing on autopilot. The questions that matter are how long confidentiality survives, whether the lender may share the pack with credit insurers or participants, whether a non-solicit covers your staff and customers, and what happens to the material if they decline.
None of that stops a declining lender from remembering the business. The practical protection is process discipline: a tight, well-chosen shortlist rather than a broad circulation, and a teaser stage that filters before identity is disclosed.
Common questions
What is a CIM?
A confidential information memorandum, also called an information memorandum or IM. In a debt raise it is the document lenders read to decide whether to lend and on what terms. In an M&A sale it is the document buyers read to decide what the business is worth. The two share a name and very little else.
How is a debt IM different from an M&A CIM?
The reader and the question. An acquirer is buying the upside, so an M&A CIM leads with the growth story and the investment thesis. A credit committee is underwriting the downside, so a debt IM leads with normalised earnings, cash conversion, security and what happens in a bad year. Reusing a sale document to raise debt reads as evasive to a lender even when nothing is hidden.
What goes in an information memorandum?
The business and how it makes money; normalised earnings with every adjustment evidenced; historical cash conversion; the proposed structure with sources and uses; security available and what already sits against it; management depth below the founder; and downside sensitivities with the covenant headroom they imply. The sensitivities section is the one borrowers most often omit and lenders most want.
What is the difference between a teaser and an IM?
A teaser is a short anonymous summary sent first, letting a lender decide whether to look properly without learning whose business it is. The IM follows once an NDA is signed and carries the full picture. Running the teaser first lets a process test appetite across several lenders at once, which is what creates the competitive tension that sets pricing.
Do I need a financial model as well?
Yes, and lenders will rebuild it in their own format regardless. The value of supplying one is that it fixes the definitions everyone argues from. A typical pack carries three years of history and three to five of forecast, monthly for the first year, plus a bridge reconciling statutory to adjusted EBITDA line by line.
Who should write the information memorandum?
At £3-15m it is usually the finance director, the company's accountants, or a debt adviser running the process, and lenders can tell which. A pack organised around the lender's decision rather than the company's history, anticipating diligence questions rather than waiting for them, is what an adviser-run process should produce.
How long does the process take after the IM goes out?
On a straightforward £3-15m raise, indicative terms typically arrive a few weeks after the IM lands, with credit approval on the selected lender following several weeks after that. Complexity, an acquisition timetable or a slow-responding lender all extend it, which is why starting before the deadline is tight matters more than the document itself.
What is the most common mistake in a debt IM?
EBITDA adjustments asserted rather than evidenced. A lender who cannot verify an adjustment strikes it out, and on a 3.0x structure every £100k removed costs about £300k of borrowing capacity. Close behind it is silence about a known weakness, because diligence surfaces it later and a lender that finds one undisclosed issue starts looking for the second.
The full treatment sits in the guide: how long does a debt raise take.
This page explains a term as it is used in the UK lower-mid-market. It is general information, not advice on any particular facility. Terms vary between lenders and between deals, and the drafting in your own agreement governs.