When a buyer is serious, the first thing they ask for is the document that explains the business. That document is the information memorandum, and it decides whether a buyer keeps talking to you or quietly moves on to the next listing. Here is what goes into one for a UAE SME, what stays out, and where owners usually get it wrong.
What an information memorandum is for
An information memorandum, or IM, is the confidential selling document for your business. It sits between two other documents. The teaser comes first: one page, no name, no address, enough for a buyer to decide whether the business fits what they are looking for. The data room comes last: contracts, bank statements, VAT returns, payroll and the licence file, opened only to a buyer who is close to an offer.
The IM is the middle step. A buyer who has signed an NDA and shown proof of funds gets it, and uses it to answer one question: is this worth the time and cost of full diligence? A good IM lets a buyer say yes, or a fast no. Either answer saves you weeks. A weak IM produces a long list of follow-up questions, and every question is a chance for the buyer to lose interest or lower the price.
It is also the first document where your business gets compared against others. UAE buyers in the AED 2 to 10 million range usually look at several businesses at once. The one with a clear, honest, well-organized memorandum feels safer, and safer businesses get better offers.
The business overview
The opening section tells the buyer what the business is in plain terms: what it sells, to whom, since when, and how it makes money. Keep it factual. State the activity, the year it started, the emirate, the number of staff and the revenue model, whether that is contracts, repeat orders, walk-in trade or a mix.
I also include a short history. Buyers want to see how the business reached its current size, because a company that has grown steadily for eight years reads differently from one that doubled last year. If something major changed, such as a new licence activity, a lost contract or a move of premises, it goes in here with a sentence of explanation. Buyers find these events in diligence anyway. It is better that they read them from you first.
Customers, suppliers and competition
This is the section buyers read twice. They want to know how dependent the revenue is on a few names. I describe customers by type and share rather than by name: for example, the largest customer is a given share of revenue, the top five together are another share, and the rest are spread across many small accounts. The real names stay out until later in the process.
For suppliers, the same logic applies. If one supplier provides most of your stock or key inputs and could change terms, say so. If you have a long relationship and written terms, say that instead. The buyer is trying to understand what could break after you leave, and a seller who points out the weak spots first earns trust on everything else.
A short competition paragraph helps too. Say who you compete against, how you win work, and what stops a new entrant from copying you. Avoid claims you cannot support. Statements like "no real competitors" make buyers suspicious.
People and the owner's role
Buyers pay for earnings that continue after the sale. So the IM needs an honest account of who does what. Show the structure by role, not by name: a general manager, a sales lead, technicians, admin. Give headcount, how long the key people have been there and whether they hold the customer relationships.
Then describe your own role without softening it. If you handle the key accounts and approve every quote, write that. The buyer will deduct a market salary for a replacement manager from your earnings, which I explain in SDE explained for UAE business owners, so it is better to show the handover you are prepared to offer. A transition period of a few months, and a plan to introduce customers to the incoming owner, answers the concern before it is raised.
Premises, licence and operations
This section covers the practical facts: where the business operates, the lease term and rent, the licence type and its permitted activities, the key equipment, and any permits the activity requires. State lease expiry dates and renewal status exactly. A lease with a year left and no renewal discussed is a risk the buyer will price, and hiding it only moves the problem to a later stage.
Describe how the work gets done in a few paragraphs: the process from enquiry to delivery, the systems you use, the seasonality of the year. Buyers who have never run this kind of business use this section to judge whether they could.
The financials
The financial section is where most of the weight sits, and where most weak memoranda fall apart. A UAE SME IM should show at least three years of revenue and profit, with the most recent twelve months set out separately. Present them in a table the buyer can read in a minute.
Then show the bridge from reported profit to seller's discretionary earnings, or SDE. Start with the net profit in the accounts, add back the owner's pay, one-off costs and personal expenses that run through the company, and state each adjustment with a short reason. Buyers apply a multiple to that figure, 2.0 to 3.5 times for businesses in this size range, and then test the result against the cash yield they need, usually 25 to 35 percent. If the bridge is vague, they will rebuild it themselves, and their version will be lower.
Every number in this section has to survive diligence. A buyer will cross the figures against VAT returns, bank statements and payroll, and any gap between the memorandum and those records is a credibility problem. I check this before the document leaves my desk, and I cover what happens when the records disagree in what kills UAE SME deals in diligence. An aggressive add-back you cannot document costs you more than it gains.
Include staff end of service liability as well. Gratuity accrues for every employee, and buyers expect to see it calculated. Showing it shortly after the profit figures signals that nothing is being hidden.
Growth opportunities and reason for sale
Buyers like to hear that there is room to grow, but only when it is specific. A realistic list works: a second location the current premises could support, a service line customers already ask for, pricing that has not been reviewed in years. Leave out forecasts built on hope. A buyer pays for what the business earns now, and treats projections as your opinion.
The reason for sale is a short paragraph and it must be consistent with everything else. Retirement, relocation, a family situation or a decision to focus on another venture are all accepted. A reason that changes between the memorandum and the first meeting is not.
Deal terms and what is included
The last section sets out what is on offer: the shares or the assets, the stock and equipment included, the handover period and the general shape of the deal you are looking for. I state the asking range or valuation basis here and the preferred structure. I do not put a final price on paper unless it has been properly tested. The choice between a share sale and an asset sale changes what the buyer takes on, which I cover in asset sale or share sale for a UAE SME.
What stays out
A good IM is detailed about the business and silent about identity. Leave out the company name, the exact address, the names of customers and suppliers, and any individual staff member's name or salary. Describe the location by area, not by street. Do not attach scans of licences or contracts. The aim is that a competitor, a staff member or a customer who somehow saw the document could not tell which company it describes. I go through the full process in how to sell a business without staff finding out.
The IM should also leave out opinions and adjectives. Words like "excellent" and "unique" add nothing. Numbers, dates and plain descriptions do the work.
How I build one
I start from the owner's accounts, VAT returns, bank statements and payroll, and build the profit bridge before I write a word. I then interview the owner for the parts the numbers do not show: the customers, the staff, the history, the weak points. The memorandum is written in a plain, direct style, checked against the records, and shown to the owner for correction before any buyer sees it.
I sold my own company, and I know how it feels to hand over this information. Owners often worry that an honest IM will scare buyers. In my experience the opposite is true. A memorandum that names the risks and answers them reads as the work of someone with nothing to hide, and that brings better buyers.
If you are thinking about selling, start with the five numbers I need, or see how I price a business in business valuation in the UAE. More about my work is at Coello Advisory.