Investment memorandum

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Investment memorandum
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Investment memorandum (IM) is a document, created in cooperation with experienced accountant and attorney, that contains relevant and reliable information about an investment idea or project in a structured and understandable form[1]. The investment memorandum serves as a decision-making tool for potential investors, because on its basis investors make a decision about possible future cooperation (about investing in a project or about refusing of cooperation). Its content should contain information about the investment attractiveness and possible investment risks. It should also contain information about project description, team description, ways of project implementation and development[2].

Investment memorandum answers the main questions of the investor:

  • What amount of investment will be required?
  • What is the basis for the calculation of the expected yield?
  • When and how will the investor get his profit?
  • What profit can be expected?
  • What are the risks of investment?
  • What is the probability of loss?

Structure of the investment memorandum

The investment memorandum should include the following sections[3]:

  • organization description and its activities,
  • required investment volumes, as well as a forecast of the results of investments,
  • information about direct competitors and level of competition,
  • information about the development strategy of the organization,
  • production information (equipment maintenance, production volume and production costs, raw materials and supplies,research and development etc.),
  • marketing information (market, marketing strategy, products, sales structure, pricing, promotions, place etc.),
  • required investment volumes, as well as a forecast of the results of investments,
  • information about the property of the organization (real estate, transport, equipment, raw materials, patents and licenses etc.),
  • financial performance of the organization (income statement, cash flow, balance sheet),
  • information about directors, managers and staff.

The difference between business plan and investment memorandum

Business plan is a project description, blueprint of the business and develop guide for the management of the company[4]. Investment memorandum represents the view of the project through the eyes of an investor. As a rule, the preparation of a general business plan precedes the writing of a memorandum for a specific investor.


  1. Barnwell R., (2018) p. 55
  2. Klonowski D. (2010), p. 184
  3. Klonowski D. (2010), p. 41
  4. Pinson L., (2008) p. 2


Author: Andrii Didukh