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How we write investment memorandums debt funds actually want to read

How we write investment memorandums debt funds actually want to read

So you want to raise money from private debt funds to grow and scale your business?

You worry without existing relationships with private debt funds or indeed lenders in general; you need to attract their attention.

But how much information to give them? You know private debt funds do not have the time to print and pore over 50 pages of company information and financials.

And how to explain the opportunity? You want to give them enough information to make an informed decision.

I’ve been there.

This was the point when I realised the importance of putting time and effort into creating an investment memorandum that’s easy to read, understand and act on.

My experience has taught me that private debt funds welcome clarity and use of plain English. Top of their priorities is getting to grips with the opportunity and understanding what’s in it for them.

Moreover, they want to be able to scan proposals and find answers to pressing questions quickly.

The problem with including weighty information and jargon in any business communication is it:

  • Slows readers down
  • Confuses and leads to misinterpretation
  • Raises questions of camouflage as expectations are neither raised or lowered

In the worst-case scenario, too much information and jargon cause readers to lose interest and drift away.

What it all boils down to is this. To compel a private debt fund to read your investment memorandum you need to:

  • Distil complex financial information
  • Use plain English to get your message across

 

How we write persuasive investment memorandums

We spend a lot of time making sure our investment memorandums:

  • Get to the point
  • Avoid jargon and legalese. We only use words private debt funds understand
  • Give debt funds the relevant information they need to make a decision

 

The first thing to do is to outline the objectives of the finance project. Make it clear how you will use the private debt fund’s money.

After that, include a concise company and market overview. Also, outline the risks, because no one likes surprises.

Beyond that, layout the terms of the investment and most importantly provide a projection of the outcome.

Do this clearly and concisely, and at the same time avoid jargon, and you will find private debt funds will happily take time out to review your opportunity.

Better still, you can expect a fast turnaround of term sheets.

Be warned. If you fill your investment memorandum with jargon, you might attract the wrong type of attention. In a recent article, the FT noted that “Ocado, the UK supermarket delivery company, attracted some online ridicule for this statement that it published with its half-year results:

“Over the last six months, the centre of gravity at Ocado Group has shifted from our heritage as an iconic and much-loved domestic pure-play online grocer to our future as a technology-driven global software and robotics platform business, providing a unique and proprietary end-to-end solution for online grocery, and an innovation factory, applying our technology expertise to adjacent markets and other verticals.”

My point is this. Short, concise sentences are easy to read and encourage readers to glide through documents. Whereas long words, long sentences and long paragraphs intimidate and confuse readers.

It’s pretty obvious once you think about it.

 

And finally

The good news is it doesn’t have to be you who puts together a persuasive investment memorandum. 

If you would like help grabbing a private debt fund’s attention with clear,  concise and relevant words, drop me a line, and we’ll set up a time to chat.

 

Investment memorandum