Crafting an Investment Memorandum (IM): A Comprehensive Guide

Are you an OSS and/or BSS supplier or telecommunications company that is thinking about seeking external investment or selling (in the sense of M&A [Mergers and Acquisitions], not the normal products and services you sell)? In recent years, we’ve been involved in an increased number of M&A projects, and I’m assuming this mirrors a rise in the amount of OSS/BSS M&A that’s happening in the market at the moment (perhaps it’s just that we’re more exposed to it than previously).

For those who are raising funds or selling, an IM (Investment Memorandum), is an essential tool for presenting your company to potential investors in a professional manner.

This visual aid should be well-structured, concise, and informative, providing a comprehensive overview of your business. In this article, we’ll guide you through the process of creating an effective investment memorandum slide deck, detailing the key information to include on each slide (or group of slides).

1. Cover Slide: Naturally, your cover slide should feature your company’s logo, name, and a brief tagline summarising your unique value proposition (UVP). This sets the stage for the presentation and establishes a clear brand identity.
2. Executive Summary: Provide a succinct overview of your company, including its mission, vision, and key objectives. Highlight your company’s primary products or services and the reasons it presents an attractive investment opportunity.  Also point out key customers and high-level financial KPIs.
3. Company & Industry Overview: Delve into your company’s history, milestones, and growth strategy. Describe your target market, industry positioning, and the key factors that set your business apart from competitors.
4. Product Portfolio: This section should describe the company’s products and services, target market, market share, unique value propositions (UVPs) and competitive advantages. In addition to providing a balanced and integrated view of the entire portfolio, it should outline the features of each product (and possibly a SWOT analysis). It should show integrations, offerings, benefits to customers and reliance on third-party (eg COTS and open-source) products and/or integration partners. It may also document the services models / offers (eg integration / customisation, product modification services, business consulting, managed services, customer support, etc) and operations model. This section may also include intellectual property (IP) such as patents, accreditations, etc and awards. It may also include in-flight projects of significance.
5. Operations, Delivery and Support: This section should provide details about the daily operations of the organisation, including key operational features such as development, support, implementation, partnership structures and overall operations / governance. This section may include discussions around key development and support tools such as CI/CD pipelines, development approaches like Agile, pipeline observability, ITSM for support ticket management, administrative solutions, release / distribution models, etc. This may also include key metrics (KPIs) relating to factors such as those above and will demonstrate the reliability of your operations / governance.
6. Management Team & Organisation Structure: Illustrate your company’s organisational structure, management team, and their relevant experience. Explain how your team’s expertise contributes to the company’s success and ensures smooth operations, enhancing a buyer’s confidence in their investment.
7. Market and Industry Analysis: Offer an overview of the OSS/BSS / telecommunications market and industry, identifying trends, challenges, and opportunities. Discuss your company’s competitive position and potential for growth within the market.
8. Financial Performance: Present key financial information (in summary format), such as income statements, balance sheets, cash flow statements, and relevant financial ratios. Include projections for future performance, based on realistic assumptions and market conditions.  More detailed versions of each financial statement may be included in the appendix and/or supporting documents.
9. Customer Case Studies / Testimonials: Showcase your customer base, highlighting major clients and their success stories. Incorporate customer testimonials to demonstrate the value and impact of your products or services.  Try to quantify how your solutions helped these customers.
10. Business Model and Monetisation: Explain your business model and how your company generates revenue. Describe your pricing strategy, sales channels, and the scalability of your model for future growth.
11. Investment Proposal and Use of Funds (if fundraising): Detail the amount of funding you’re seeking, the proposed terms of investment, and the anticipated use of funds. Explain how the investment will contribute to the company’s growth and the expected return for investors.
12. Potential Synergies (if seeking to be acquired): Discuss potential synergies or cost savings that a strategic acquirer may realise through the purchase. This is particularly relevant for roll-ups or deals involving multiple parties where the collective
13. Contact Information and Next Steps: Conclude your presentation with your contact information and a call-to-action, encouraging investors to get in touch or schedule a follow-up meeting to discuss the opportunity further.

An effective investment memorandum slide deck is a vital component of your fundraising efforts. By following the guidelines provided in this blog post, you can create a compelling and informative presentation that highlights your company’s strengths and showcases the potential value (current and future value) of an investment in your business. Remember to tailor your slide deck to your audience, ensuring it remains clear, concise, and engaging throughout.

Others may suggest otherwise, but I always recommend transparency – to show the good but also be open about the not so good. When it comes to OSS/BSS products, we all know there’s always room to improve, just as there is room to improve the companies that make them too. Investors appreciate the candour and that honesty engenders greater trust from the outset. Investors will almost always conduct in-depth due diligence and they don’t appreciate finding issues that you’ve attempted to hide away.

If you need any help preparing your IM to best highlight the value (monetary and non-monetary) of your company and solutions, we’d be delighted to help. Our executive content creation services specialise in building compelling messages that combine business benefits, technical capabilities, current expectations of return, market positions and future possibilities (amongst other things).

Thanks to Logan Laux of Verdant Advisers for critiquing and suggesting improvements to this IM framework.