Parts 6 and 7 of my intro to smb acquisitions series of posts covered strategies for getting the attention of the right brokers. Now, part 8 will cover what happens at the next step - You've received a Confidential Information Memorandum (CIM). Here's what to expect:

1) The CIM essentially functions as an advertisement meant to attract buyers. Its purpose is to provide potential acquirers with essential facts regarding the business that would help them determine whether to pursue the acquisition or not.

2) A buyer typically will receive a CIM after signing an NDA. Due to the confidential nature of the details provided in the CIM, it is important to develop trust between the seller and potential buyer and protect the identity of the business.

3) A CIM typically contains an executive summary, a business overview, financial, operations information, sales, and marketing information. Some additional components include industry and market, intellectual property, staffing and management, and legal regulatory details.

4) To go more into detail, details in the CIM could include staffing and management; the number of employees and their seniority; number of customers; customer growth; and customer concentration; financial statements and projections; and legal information.

5) Importantly, a CIM is not a binding contract, nor is it subject to third party auditing/reporting requirements. Buyers should approach all elements of a CIM with a critical eye.

6) Some red flags to look out for while analyzing CIMs are inconsistent financial information, unusual growth projections, and lack of competitive analysis, because they may hint at underlying problems

Hope this was helpful! To get more content like this, make sure to give me a follow and check out my upcoming Private Market Labs Insights conversation with ^Searchfunder member‌. His work with SMBootcamp makes him one of the best when it comes to SMB education. Streaming on Searchfunder 1/24 at 2:00 CT!