What is an Information Memorandum in a Business Sale?

by Vanessa Lovie-Yousaf 20th of October, 2026

What is an Information Memorandum in a Business Sale?

An information memorandum, often called an IM or info memo, is a document that describes a business for sale in enough detail for a buyer to decide whether to take things further. It's usually prepared by the business owner or their business broker, and it's normally shared only after a buyer has signed a confidentiality agreement.

If you're looking at businesses for sale, the IM is usually your first detailed look beyond the advertisement. If you're selling, it's one of the most important documents you'll put in front of buyers.

Buyers are asking for this information earlier. Among buyers who wrote a message with their enquiry on Bsale between July and September 2026, around one in four (23%) asked for the business's financials, profit and loss statement or information memorandum. A year earlier, it was 17%.

This guide explains what an IM is, what it usually includes and leaves out, when you'll receive one, and how to read it.

Why is an IM Created?

An IM sits between the advertisement and the offer. The ad gets a buyer's attention. The IM gives them enough information to decide whether the business suits them and whether it's worth making an offer.

For buyers, it saves time. Instead of asking the same questions one at a time, they get the key details about the business in one place.

For sellers, putting an IM together is a useful exercise in itself. It makes you organise the business's information, work out what makes it attractive to a buyer, and explain how the asking price was reached.

Most IMs are a designed PDF. A small business might have a short IM of a few pages, while a larger business could have a detailed document of 15 pages or more.

Brokers increasingly use technology to help put IMs together, but experienced brokers say it doesn't replace knowing the business. Nigel Gill, a broker who works on larger transactions, uses digital tools to help with documentation, but believes each business needs its own analysis and presentation.

"They haven't demonstrated to me that you can just put in some information and have AI write your whole IM," he said.

Buyers Are Asking for More Detail, Sooner

According to Bsale marketplace data, almost one in four written buyer enquiries (23%) between July and September 2026 asked for the business's financials or an IM. In the same quarter of 2025, it was 17%.

Stats on Buyers Requesting IM upfront

It wasn't the only direct question on the rise. Over the same period, the share of written enquiries that raised finance or vendor finance went from 13% to 18%. The share that mentioned a confidentiality agreement went from 6% to 10%.

All three topics are part of the IM stage of a sale. Buyers request the IM to see the figures, sign a confidentiality agreement to receive it, and need those figures to approach a lender. More buyers on Bsale are now raising these points in their first message, rather than waiting until later in the conversation.

For sellers, that means having the IM and confidentiality agreement ready before the business goes to market, so you can respond to a serious buyer quickly. For buyers, it means asking for the IM in your first enquiry is common practice.

When You'll Receive an IM

Buyers usually receive an IM after signing a confidentiality agreement, also called a non-disclosure agreement (NDA) or confidentiality deed.

That's because an IM contains information the seller doesn't want circulating, such as trading figures, lease terms and how the business is structured. If it fell into the wrong hands, it could affect the business's relationships with staff, customers, suppliers or competitors. A signed agreement gives the seller some protection and shows the buyer is serious.

The process varies between sellers and brokers. Some send the IM as soon as the confidentiality agreement is signed. Others want to speak with the buyer, or meet them, before releasing it.

Newcastle broker Shane Fox of Merchant Business Brokers starts with a confidentiality deed that the buyer signs and the vendor approves before he releases the IM. The vendor also approves the IM itself, along with the advertising.

Brokers also want to make sure the business suits the buyer before sharing more detail.

"I want to make sure it's a good fit for you," Shane said. "I want to make sure that I'm sharing a business that's not going to waste your time."

As a buyer, expect to answer a few questions about your background, budget and plans. It's part of the process, and it works in your favour too. If you go on to buy the business, you'll want its information protected in the same way.

What an IM Usually Includes

No two IMs are the same, but most cover these areas:

Business overview. What the business does, its history, location, trading hours and ownership structure.
Products and services. What it sells, who its customers are in general terms, and any intellectual property, trademarks or brands included in the sale.
Staff and operations. How the business is run, the team structure and how involved the owner is day to day.
Premises and lease. Lease terms, rent, options to renew and permitted use, or details of freehold property if it's included.
Financial summary. Usually a summary of profit and loss figures for the past two or three years, with add-backs and an adjusted earnings figure such as EBITDA.
Reason for selling. Why the owner is moving on.
Growth opportunities. Where the seller sees room for a new owner to build the business.
Price and terms. The asking price and what it includes, such as whether stock is extra (WIWO or plus SAV), the training or handover period, and whether vendor finance is available.

The financial summary is often what buyers look at first. Clear, consistent figures make it much easier for a buyer to take the next step.

What an IM Usually Leaves Out

An IM gives a buyer the overall picture, not every detail. Sellers decide what goes in, and some information is usually held back until later in the process.

An IM is unlikely to include:

the names of customers, clients or suppliers
tax returns and detailed financial statements
individual staff details and wages
supplier pricing and contract terms

This information normally becomes available during due diligence, after the buyer has made an offer and it has been accepted, usually subject to conditions.

Who Prepares an IM

When a business is sold through a business broker, the broker usually prepares the IM using information supplied by the owner and their accountant. The owner then reviews and approves it before it goes to buyers.

Owners selling privately can prepare their own IM. If you do, get your accountant to check the financial summary, and be careful not to promise anything the business can't back up later in due diligence.

However it's prepared, the IM is only as good as the information behind it. Michael Philpott, who leads a group of 18 brokers, says disorganised vendors can slow a sale down.

"They can't find the financials, can't find the BAS statements, so when the pressure of a transaction arrives, those gaps can become significant obstacles," he said.

Reading an IM as a Buyer

An IM is prepared by the seller and their advisers, so it presents the business in the best possible light. That doesn't make it unreliable, but it is a marketing document, not an independent report.

Use it to decide whether the business is worth pursuing, then test what it says during due diligence. When reading an IM, it helps to:

check whether the earnings figures match across each section and each year
look closely at the add-backs, and ask how each one was worked out
note how much the business depends on the current owner
check how long is left on the lease, and what options there are to renew
find out exactly what the asking price includes
write down your questions to raise with the seller or broker before making an offer

Show the IM to your accountant early. If you'll need a loan, your lender will want to see the financial information too.

Once your offer is accepted, due diligence gives you access to the detailed records, such as tax returns, BAS statements, customer and supplier information. The full process is covered in our guide to buying a business in Australia.

Preparing a Strong IM as a Seller

A good IM answers a buyer's first round of questions before they ask them. Broker Martin LoSurdo says the aim is to make the business easy to understand, not just for the buyer but for the people advising them.

"The objective is to make it easier for a prospective buyer, their accountant and their financier to understand exactly what they are considering," he said.

In practice, that means:

getting your financial statements and BAS up to date before you go to market
being able to explain every add-back
having your lease and key contracts in place and easy to present
giving an honest reason for selling
making sure the asking price is supported by the figures

Anything in the IM will be checked during due diligence. If the detailed records don't match the summary, buyers lose confidence and deals can fall over. For more on getting ready, see our guide to selling a business in Australia.

Frequently Asked Questions

What does IM stand for in a business sale? IM stands for information memorandum. It's a document describing a business for sale, given to interested buyers so they can decide whether to make an offer.
Is an information memorandum the same as a business plan? No. A business plan looks forward and is written to guide the owner or attract funding. An IM describes the business as it stands today, including its recent financial performance, for a buyer.
Do I have to sign an NDA to get an IM? Usually, yes. Most sellers and brokers ask buyers to sign a confidentiality agreement before releasing an IM, because it contains sensitive information about the business.
Can I rely on the figures in an IM? Treat them as a starting point. The IM is prepared by the seller's side, so the figures should be checked against the business's records during due diligence, ideally with your accountant.
How long is an information memorandum? It depends on the size of the business. A small business might have an IM of a few pages, while a larger business could have one of 15 pages or more.
Is there an information memorandum template? Many brokers use their own templates, and sellers preparing their own IM can use a template as a starting point. Whatever format you use, the content needs to be accurate and specific to your business.

Originally published 2024. Update 20th October 2026

Disclaimer: Statistics are based on Bsale.com.au marketplace data and do not represent the entire Australian business sales market. Listing information is supplied by advertisers and is not independently verified by Bsale. Data may contain errors, duplicates or outdated information. Listings and asking prices may not be directly comparable, including those advertised as WIWO, plus SAV or including freehold property. Asking prices are not confirmed sale prices, and listings marked as sold do not verify completed transactions. Figures are indicative only. This article is general information, not professional advice. Readers should conduct independent due diligence before making business or investment decisions.

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