Confidential Information Memorandum for an MSP Sale

Build an Evidence-Led Outline

Use the following ten-part outline as a drafting structure. You can allocate a page to each part if the material fits, but readability and evidence matter more than a fixed page count. Keep detailed schedules in the supporting records rather than reducing the font until everything appears concise.

Agree the disclosure process and recipients with the people advising on the sale. Use appropriate account identifiers in an initial summary and control access to the underlying records. Don't copy credentials or unnecessary personal information into a document meant to circulate among prospective parties.

Give every material table a reporting period and source. If the accounts change during drafting, update the dependent figures together. An opening summary and a financial schedule using different versions of revenue leave the reader to resolve the difference.

Reconcile Revenue Before Calling It Recurring

The model's US example has $1,890,000 of annual managed-services revenue and $763,269 of recurring product revenue. Together they are $2,653,269, about 73% of its $3,634,615 total revenue. The recurring definition includes both lines.

Keep those components identifiable in the memo. Recurring product revenue has its own purchase cost and margin, rather than the same economics as a managed seat. One-time hardware and project revenue belong on their own lines.

The example has 35 clients and average managed-services monthly recurring revenue of $4,500 per client. Monthly recurring revenue is the continuing amount billed each month. That average does not establish the actual distribution of revenue across the clients.

Use your account schedule to show the real distribution. Include the relevant margins and relationships alongside material dependencies. Don't present an average client size as evidence that losing a particular account would be immaterial.

Make the Earnings Basis Reproducible

Start with the recorded accounts and show every proposed adjustment separately. Identify the period and the evidence behind it. Don't remove a recurring cost merely because a hypothetical future buyer might organize delivery differently.

The model pays a fair-market owner salary before counting profit. The owner's technical work counts as direct labor. A memo that adds back all owner pay while assuming the same work continues has left a replacement cost unresolved.

Distinguish gross profit from EBITDA. Gross profit is revenue left after direct delivery cost; EBITDA also reflects operating expenses such as overhead and sales costs before the excluded items in its name. Presenting a managed-service gross-margin target as the business's earnings margin would mix different measures.

Use actual results in the historical schedule. Put a proposed price increase or tool saving in the forecast until it belongs in the recorded performance. The memo should explain the dependency and implementation cost without presenting the improvement as already earned.

Show What Happens Without the Owner

The model's enterprise-value position is recurring, profitable revenue without reliance on the owner. Write the owner's current responsibilities with the person who can continue each. Keep incomplete transfers visible rather than treating an intended handover as finished.

Do the same for important technical and client relationships. Record where procedures and authorized access are maintained. A named replacement who has never performed the task is a training action, not proof of independent delivery.

Don't promise that a document eliminates a person dependency. Use the maintained work records to demonstrate the handoff. A prospective reader should be able to distinguish work already transferred from the work you still plan to transfer.

Label the Valuation Illustration

For the US stable example's $730,276 EBITDA, use the model's stated historical curve. It draws on iTValuations 2025 figures, with 4.75 times EBITDA at $500,000 and 6.5 times at $1,000,000. The model interpolates the multiple between those anchors.

Calculate the unrounded multiple as 4.75 + (($730,276 − $500,000) ÷ ($1,000,000 − $500,000)) × (6.5 − 4.75). This places the example’s earnings between the two historical anchors and applies the same fraction of the change in their multiples.

Using unrounded earnings and the unrounded multiple, the model's valuation table gives $4,057,386 for the US stable example. Its displayed multiple is 5.56. Multiplying displayed rounded inputs can change the result, so keep the calculation's precision separate from its presentation.

This is an illustration using the model's inputs and historical method, not a current offer or guaranteed sale price. The year belongs beside the curve; the model calls for yearly review and notes that 2025 was a seller's market. Don't convert a hypothetical improvement into an agreed buyer adjustment.

The model's belief is that buyers value EBITDA and discount non-recurring revenue. That position doesn't supply a fixed discount for each revenue category in your memo. Explain the revenue and earnings evidence without inventing a haircut or a premium for the narrative.

Check the Document Against the Records

Recalculate the summary from the supporting schedules before sharing it. Check that revenue periods and earnings adjustments agree throughout. Where a result depends on an assumption, keep that assumption beside it rather than hiding it in a general disclaimer at the end.

A rule of thumb doesn't become a valuation method when it gets a cover page. Ask the person checking the draft to reproduce the material calculations from the stated inputs. Repair the first unsupported number before adding another paragraph about the quality of the business.

Finish with the open matters and the next review step appropriate to the sale process. Keep the source records controlled and available to the authorized reviewers. The useful first draft is the one whose numbers can be checked, even when it still has a visible list of questions to resolve.