Department of Tourism, Major Events, Small Business and the Commonwealth Games. Workbook 4: Preparing an Information Memorandum

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1 Department of Tourism, Major Events, Small Business and the Commonwealth Games Workbook 4: Preparing an Information Memorandum

2 The IM is your key marketing document take time to ensure it is a quality document that addresses all of the major aspects of the business and opportunity Products and services Customers and suppliers Industry History Management team Source and application of funds Key risks and mitigants Investment highlights Key sections of an IM Financials

3 Tip #1. Before getting started, spend some time planning and brainstorming What are the competitive advantages of the business? What are the key messages that you are trying to get across? Put yourself in the shoes of the investor and ask yourself what you would want to know about this type of business? What is the most appropriate structure of the document that sells the story effectively?

4 Tip #2. Consider who the most likely investors are, what value they would see in the business and tailor the IM accordingly Understanding target audiences and where a prospective purchaser may identify special value can help with the construction of various sections The converse of this is where you might have a poor distribution network that other businesses have present this as an opportunity Identify who could make more from our business than we can and why

5 Tip #3. Ensure that the Executive Summary captures the attention of the potential investor and clearly articulates the Investment Highlights in a clear, concise and compelling manner If the Executive Summary doesn t achieve this, potential bidders are unlikely to read the rest of the document Briefly answer the why and how questions in the Investment Highlights Include the reason for raising capital and management s commitment post transaction

6 Tip #4. Devote sufficient time and attention to describing the future opportunities that support the financial forecasts Investors are buying the future, not the past Consider all possible growth opportunities Describe how these growth opportunities could be implemented There should be some link between the financial forecast and the growth opportunities that we describe

7 Tip #5. It all comes down to the financials! Do the historical financials reflect the commentary in the early sections of the IM? Consider keeping the commentary in relation to the financials high-level Double check calculations and reasons for all normalisation adjustments Consider completing a high level mini DD on the financials If/When there is a hockey stick forecast, is it achievable and does the IM adequately support the forecasts?

8 Tip #6. The Tourism industry section needs to be relevant and add value, especially for overseas investors Don t just dump a graph in if it adds no value Present the market size of industry serviced and Management s estimation of the business market share (if possible) Consider regulation and the competitive landscape Source statistics and forecasts from independent parties as much as possible.

9 Tip #7. KISS The IM should be short and succinct. Consider using appendices or attachments to support your IM

10 DO s & don ts summary Do Don t Keep it punchy and straight to the point. Write a large amount of text that is not considered important or meaningful Keep a consistent message throughout the document. Create mixed messages that become convoluted and confuse the reader. Be balanced addressing risk areas is ok as long as you also deal with mitigation strategies Provide supporting evidence/research to justify key assumptions especially with respect to financial projections Invest time and resource to ensure it is a professional looking document Make it too salesy Provide too much detail so that the purchaser does not feel that they need to communicate with the selling agent Provide financial forecasts or market assumptions without the proper supporting research