Offering Memorandum

Last updated: March 22, 2024

What Does Offering Memorandum Mean?

An offering memorandum is typically referred to in the context of IPOs or private placements for public companies. However, it is also a term used by buyers and sellers of private middle market businesses. An offering memorandum is simply a selling document put together by an investment banker (typically while conducting an auction process) to generate real interested from prospective buyers.

It is a detailed, data rich document which provides substantial information about a company such as the nature of the industry and specific business, financial information including historical results and future projections, details on assets owned and rented by the company, and a summary of the proposed structure and transaction steps. Once the document has been circulated, the investment banker will look for potential buyers to provide expression of interest in order to move the sales process along.


Divestopedia Explains Offering Memorandum

An offering memorandum is akin to a prospectus for private placements. It discloses key information to potential buyers, and its aim is to present the most lucrative picture of the company as an acquisition target.

Some key areas that an offering memorandum should describe in detail include:

  • Customer diversification;
  • Barrier to entry from competitors;
  • Ability and plan to achieve future projections;
  • Future growth opportunities;
  • Strength of management team;
  • Scalability of operations; and
  • Opportunities in the external market place.

The most relevant point for sellers is that they, not their advisers, should own the information included in the offering memorandum. You are hiring an adviser to prepare the document, but the information should be provided and vetted by you to ensure there are no errors or omissions. It provides you the opportunity to describe your business in the most positive light possible. If there are any historical issues with the company, you can describe what steps have been/are being taken to correct for them, as well as the company’s future strategy to increase revenue and manage margins and free cash flow.



Confidential Information Memorandum

private placement memorandum

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