What Should I Include in a Confidential Information Memorandum (CIM)?

In the world of mergers and acquisitions, the Confidential Information Memorandum (CIM) is more than just a document — it’s your company’s first impression to serious buyers. For software and technology founders considering a sale, the CIM is a strategic asset that can shape buyer perception, drive valuation, and accelerate deal momentum.

But what exactly should a CIM include? And how do you strike the right balance between transparency and positioning?

This article outlines the essential components of a CIM, with a focus on software and tech-enabled businesses. Whether you’re preparing for a full exit or exploring growth capital, understanding how to craft a compelling CIM is critical to a successful outcome.

What Is a Confidential Information Memorandum?

A CIM is a detailed, confidential document prepared by a company (or its M&A advisor) to present the business to potential acquirers or investors. It typically follows the signing of a non-disclosure agreement (NDA) and serves as the primary marketing document in a sell-side process.

Think of it as a prospectus for your business — one that tells your story, outlines your financials, and highlights your strategic value. For buyers, it’s the foundation for initial valuation modeling and due diligence planning.

Key Sections to Include in a CIM

While the structure may vary slightly depending on the industry and deal size, a well-prepared CIM for a software or technology company should include the following components:

1. Executive Summary

• High-level overview of the business
• Key investment highlights
• Summary of financial performance and growth trajectory
• Transaction rationale (e.g., full sale, recapitalization, growth equity)

This section should be concise but compelling — it sets the tone for the rest of the document. A strong executive summary can determine whether a buyer reads on or moves on.

2. Company Overview

• Founding story and evolution
• Mission, vision, and core values
• Legal structure and ownership
• Organizational chart and key team bios

Buyers want to understand not just what the company does, but why it exists and who’s behind it. For founder-led businesses, this section often carries emotional weight — and strategic importance.

3. Products and Technology

• Overview of core products or services
• Technology stack and architecture
• Product roadmap and innovation pipeline
• Intellectual property (IP) and proprietary assets

For SaaS and software companies, this section is critical. Buyers will assess scalability, defensibility, and technical debt. Be prepared to address how your platform is built, maintained, and differentiated.

4. Market Opportunity

• Industry landscape and trends
• Target customer segments
• Competitive positioning and market share
• Growth drivers and barriers to entry

Use data to support your claims. Reference third-party research (e.g., Gartner, IDC, PitchBook) and include TAM/SAM/SOM analysis where appropriate. This section helps buyers understand the upside potential.

5. Go-to-Market Strategy

• Sales channels and distribution model
• Customer acquisition cost (CAC) and lifetime value (LTV)
• Marketing strategy and conversion funnels
• Customer success and retention programs

As we’ve discussed in Conversion Rate Optimization (CRO), understanding how your business acquires and retains customers is essential to valuation. Buyers will scrutinize your unit economics and scalability.

6. Financial Overview

• Historical financials (3–5 years)
• Revenue breakdown (by product, customer, geography)
• Adjusted EBITDA and add-backs
• Forecasts and financial projections

Include clean, GAAP-compliant financials with clear footnotes. If you’re using adjusted EBITDA, be transparent about add-backs. For guidance, see our article on Website Valuation and Discretionary Earnings.

7. Customer and Revenue Metrics

• Top customers and concentration risk
• Churn rate, net revenue retention (NRR), and MRR/ARR
• Contract terms and renewal rates
• Customer testimonials or case studies (if permitted)

For SaaS companies, metrics like NRR and logo retention are often more telling than GAAP revenue. Buyers will also want to understand contract structures — especially in recurring revenue models.

8. Management and Team

• Key executives and their roles
• Succession planning and retention risks
• Incentive structures and equity ownership

Buyers often view the team as part of the asset. If the founder plans to exit post-transaction, it’s important to outline transition plans and identify leadership continuity.

9. Legal and Regulatory Considerations

• Corporate structure and cap table
• Pending litigation or disputes
• Compliance with data privacy laws (e.g., GDPR, CCPA)
• IP ownership and licensing agreements

This section should preempt red flags. As we noted in Completing Due Diligence Before the LOI, early transparency can build trust and reduce surprises later in the process.

10. Transaction Details and Process

• Type of transaction sought (e.g., full sale, minority investment)
• Preferred buyer profile (strategic, financial, hybrid)
• Deal timeline and next steps
• Instructions for submitting indications of interest (IOIs)

While valuation guidance is often omitted from the CIM, some sellers choose to include a range or reference prior funding rounds. This section should also outline how the process will be managed — especially if an advisor like iMerge is leading the transaction.

Best Practices for Crafting a CIM

• Tailor the narrative: Position your business in a way that aligns with buyer priorities — whether that’s growth, profitability, or strategic fit.
• Balance detail with clarity: Avoid overwhelming readers with data. Use visuals, charts, and summaries to enhance readability.
• Maintain confidentiality: Redact sensitive customer names or trade secrets unless the buyer is deep in the process.
• Work with experienced advisors: Firms like iMerge help craft CIMs that resonate with both strategic and financial buyers, drawing on deep sector knowledge and transaction experience.

Conclusion

A well-structured CIM is more than a formality — it’s a strategic tool that can shape buyer perception, accelerate diligence, and ultimately influence valuation. For software and technology founders, investing the time and expertise to get it right is essential.

Founders navigating valuation or deal structuring decisions can benefit from iMerge’s experience in software and tech exits — reach out for guidance tailored to your situation.