3 Reasons Not to Skimp on the Market Research for your Information Memorandum

1. 3 Reasons Not to Skimp on the Market Research for your Information Memorandum Anyone who has ever created a business plan understands the role that Market Research plays in its creation. The business plan isn’t the only place where market research matters. It is a vital part to many business documents, including an information memorandum. An information memorandum, sometimes referred to as a Confidential Information Memorandum (CIM) is a document used in mergers and acquisitions when preparing a business for sale. It is a lengthy, thorough document, similar to a business plan, that outlines all the pertinent information about a business so potential buyers can make a decision whether or not to purchase or invest. Thorough market research can play a very helpful an important role in the creation of this document. · · It Informs Multiple Sections If you have owned or been in a business for any length of time, you may think you have a full handle on the industry and market in which it operates. However, things are changing all the time and markets and trends are evolving at a more rapid rate than ever before. It is especially easy to miss cues from the outside world when you are busy working in your business. Therefore, market research often becomes even more important the closer to the busines you are.

2. The reason it is so important in the Information Memorandum? It doesn’t just inform the industry and market overview but, can have implications and tie-ins to several other aspects of the plan, most notably financial projections. While the financials are based on actual performance of the company to-date, market research will help solidify the assumptions about the future which become the financial projections. This isn’t the only area that will be impacted by this information either. · · It Reinforces Strengths & Opportunities One of the more important reasons for conducting current market research to include in the information memorandum is that it can reveal or reinforce strengths and opportunities of the business. It is often through the process of market research that new opportunities become apparent. When trying to sell a business, this can make a huge difference in how attractive the business is to others. Market research not only helps quantify and qualify the current position of the business in the larger market or industry but, also what might be on the horizon or ways a potential buyer may capitalize on opportunities identified. · · It Can Maximizes Selling Price At the end of the day, one of the main purposes of the information memorandum is to maximize the selling price of the business. As explained above, market research may do that in a number of ways. Although this is not the only reason market research matters for the information memorandum, it may ultimately be the most important one. It also makes buyers more comfortable because it shows you have done your due diligence and that the information you are providing is accurate and sound. When it comes to any type of business transaction, Market Research always has a role to play. Specifically, it informs a lot of the external factors under which businesses must operate. Although most commonly thought of in terms of a business plan, it is actually crucial for all types of business documents, including the confidential information memorandum.