Confidentiality
What should be included in a confidential information memorandum for a business sale?
The sections of a confidential information memorandum, what each should cover, and what to hold back until late in the deal.
By Michael D. Rubin, CEO & Founder · September 2026 · 806 words
A confidential information memorandum should give a qualified buyer everything needed to make a serious offer: what the company does, why customers buy, how it operates, who runs it, what the adjusted financials show and where growth could come from, while holding back the details that would hurt you if the deal does not close. It is the main selling document of the process.
It goes by several names: CIM, offering memorandum or confidential marketing package. Whatever it is called, buyers read it to decide whether to meet you and what to offer.
Who reads it, and when
The memorandum goes only to buyers who have registered, signed a confidentiality agreement and shown they can fund a purchase. Its readers include private equity analysts, business development staff at companies in your industry, individual buyers and their lenders. Lenders matter more than owners expect: if an SBA or bank lender cannot follow the numbers, the buyer cannot finance the offer.
Because it forms the basis for letters of intent, anything the memorandum says will later be tested in due diligence. Accuracy is not optional. It also sets the tone: a clear, accurate memorandum signals an organized company and a prepared seller, which tends to draw fewer low offers.
Section by section
| Section | What it covers | What stays out until later |
|---|---|---|
| Executive summary | The company in one page: what it does, size, strengths, reason for sale | Anything that identifies it beyond the name |
| History and ownership | How the company grew, milestones, ownership structure | Disputes between owners, unless material |
| Products, services and customers | What you sell, to whom, customer types, concentration and retention | Customer names and contract pricing |
| Sales and marketing | How customers find you, repeat business, service agreements | Detailed pricing strategy |
| Operations and facilities | Locations, equipment, capacity, suppliers, systems | Supplier terms that competitors could use |
| People and management | Organization chart by role, tenure, who runs what without the owner | Employee names and individual pay |
| Financials | Three years of results, the financial recast, current year to date | General ledger detail, until diligence |
| Growth opportunities | Realistic, supported ways the next owner can grow | Plans that only work in your hands |
| Transaction | What you want from a sale and your intended role afterward | Your minimum price |
The financial recast is the heart of the document
A financial recast restates your results to show what a new owner would actually earn. It adds back expenses that will not continue after the sale: owner pay above a market salary, personal vehicles or insurance run through the company, one-time legal or repair costs. The result is adjusted EBITDA, earnings before interest, taxes, depreciation and amortization after those adjustments, which is what most buyers price from.
Every add-back should be documented and easy to verify. One overreaching adjustment makes buyers doubt all the others. Our long read what is my business worth explains how buyers turn adjusted earnings into a price.
What makes a memorandum persuasive
Buyers read many of these documents. The ones that earn a meeting share a few traits:
- Specific examples instead of adjectives: tenure of key staff, share of repeat customers, how long service contracts run.
- Honesty about weaknesses, with how they are being handled. Buyers find them anyway.
- The same numbers everywhere, matching the recast and the tax returns.
- Clear writing a lender can follow in one reading.
- Photographs and video that show the operation without identifying details before buyers are cleared.
Common mistakes
- Naming customers or including contracts too early.
- Growth projections with no basis in past results.
- Add-backs that are really ongoing costs.
- Generic language that could describe any company in the industry.
- Stale financials, several months old by the time buyers read them.
How long it should be, and how it is used
A memorandum should be long enough to answer a buyer’s first round of questions and no longer. Buyers skim before they read, so the executive summary and the financial pages carry the most weight, and every other section should support them.
It is also a working document. Questions from the first buyer meetings often reveal what it should have said, and the financial pages should be updated as each month closes. The deeper detail, such as contracts and named customers, belongs in due diligence for the buyer whose letter of intent you accept, not in the document every qualified buyer receives.
How MDR & Associates builds it
Every company we represent goes to market with a confidential marketing package, a financial recast and a professionally produced HD marketing video, created by the firm’s own video production team; examples are on our videos page. Building the package is step three of our ten-step process, and it is released only to buyers who have passed our screening.
To find out what your recast earnings might look like to a buyer, start with a free valuation snapshot.
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