The information memorandum is the primary marketing document in a letting agency sale. It is prepared by the seller’s broker, released to buyers after a non-disclosure agreement has been signed, and forms the basis on which a buyer decides whether to submit an offer. Understanding what a well-constructed IM contains — and how buyers read it — helps sellers present their business clearly and avoid the trust problems that arise when the document and the reality diverge.
This guide covers what an IM is, what it contains for a letting agency specifically, what distinguishes a strong IM from a weak one, and how buyers actually use it in their decision-making. For a complete overview of the sale process, see how to sell your estate agency. For guidance on how the underlying valuation is calculated, see our estate agency valuation guide.
What an Information Memorandum Is
An IM is a marketing document, not a legal document. It presents the business in its best defensible light and gives buyers enough information to decide whether the opportunity merits further investigation. It does not replace due diligence, and nothing in it constitutes a warranty.
The IM is released after an NDA is signed, not before. Its purpose at that stage is to convert a buyer’s initial interest into a formal offer. A buyer who cannot move from the IM to a credible offer is not the right buyer for the transaction.
Because the IM is the document that shapes a buyer’s first substantive impression of the business, inaccuracies carry a disproportionate cost. A misleading IM — whether the AMFI figure is overstated, the gap rate is understated, or the team structure is presented in terms that do not survive due diligence — does not result in a higher price. It results in a renegotiation, a breakdown of trust at the point when both parties should be progressing toward heads of terms, or a buyer who withdraws after committing time and resource. The IM that generates the best outcome is accurate, structured, and honest about the things a buyer will discover in any case.
What a Letting Agency IM Contains
A well-prepared letting agency IM has eight sections. Each serves a specific purpose in the buyer’s assessment.
Executive summary. A one to two page overview of the business: the total managed portfolio by property count, geographic coverage, headline AMFI, and a brief financial snapshot. The executive summary is the first thing a buyer reads and often determines whether they read the rest. It should be precise — buyers are immediately sensitive to vague AMFI descriptions, ranges, or figures that are qualified out of interpretability.
Business overview. The history and operational context of the business: years in operation, office locations, the property management systems in use, the services offered to landlords and tenants, and the geographic footprint. For multi-branch operations, this section sets out the relative scale of each branch.
AMFI schedule. The most scrutinised section in any letting agency IM. This sets out the total Annual Management Fee Income broken down by income category — standard management fees, let-only fees, tenancy renewal income, and any maintenance or supplementary income — alongside a three-year AMFI trend and the current gap rate. Buyers read the AMFI schedule first, before the financials, because the AMFI is what drives the valuation. A three-year trend that shows stable or growing AMFI supports the asking price directly; a declining trend requires explanation. The gap rate — the proportion of the managed portfolio currently vacant — is stated here and will be verified independently during due diligence.
Management agreement register summary. A summary of the management agreement portfolio: total properties under management, average landlord tenure, the proportion of agreements that contain assignment or change-of-control provisions, and any material landlord concentration. This section matters because the management agreements are the asset being sold. Buyers are specifically looking for concentration risk — whether a small number of landlords account for a disproportionate share of the AMFI — and for assignment provisions that will determine how cleanly the portfolio can be transferred.
Team structure. Who runs the business day-to-day, how long they have been in post, and how the managed portfolio relationships are distributed across the team. This section carries a signal that many sellers underestimate: it tells buyers whether the business is team-managed or owner-managed. Where the owner is the primary landlord relationship, buyers face post-completion attrition risk that earn-out terms cannot fully neutralise. Where the portfolio relationships are embedded in a stable team that will transfer with the business, the buyer’s risk is materially lower.
Financial summary. Three years of revenue, EBITDA, and a normalised EBITDA with adjustments. The normalisation removes owner-manager remuneration above a market-rate salary for the function performed, non-recurring costs, and any other items that inflate or deflate the reported EBITDA. Buyers use the normalised EBITDA to cross-check the AMFI multiple and to construct their own internal return model.
Asking price and deal structure. The headline price expressed as an AMFI multiple, and the proposed deal structure — completion payment and earn-out terms, if applicable. This section sets the buyer’s expectations before they begin modelling. The asking price in an IM is a starting position, not a final number; buyers know this, and sellers should too.
Reason for sale. A clear, credible explanation of why the business is being sold. Retirement, health, portfolio rationalisation, and succession planning are all common and accepted. Buyers become suspicious when the reason for sale is vague or is inconsistent with the operational profile of the business — a young owner with a growing portfolio selling for “lifestyle reasons” raises more questions than it answers.
What Makes a Strong IM
Four things distinguish an IM that accelerates a transaction from one that stalls it.
AMFI that reconciles to accounts. The AMFI figure presented in the IM should be reconcilable to the revenue line in the filed accounts. Where the figure cannot be traced — because of VAT treatment, timing, or classification differences — buyers treat the discrepancy as a question mark until it is resolved. Preparing a clean reconciliation before the IM is drafted removes this obstacle.
An honest gap rate. Buyers calculate the gap rate themselves from the due diligence register. If the gap rate in the IM is understated, it will be identified, the conversation around trust will begin, and the deal will be harder to complete on the terms originally discussed. Presenting the actual gap rate — with a brief explanation if it is higher than the sector average — is invariably better than the alternative.
Credible team independence. An IM that presents the business as team-managed is immediately undermined if the team structure section shows that every significant landlord relationship traces back to the owner personally. Buyers will test the claim during due diligence. Where the independence is genuine, the IM should evidence it clearly.
A clear three-year AMFI trend. A flat or declining trend needs explanation in the IM, not suppression. If the AMFI declined in year two because of a specific and non-recurring event — a large landlord relocating, a branch restructure — that context belongs in the document. A buyer who discovers an unexplained decline during due diligence will assume the worst explanation.
How Buyers Use the IM
Criteria fit assessment. The primary use of the IM is to determine whether the business meets the buyer’s acquisition criteria: geography, scale, AMFI level, portfolio quality, and team structure. Most buyers have defined parameters, and a well-structured IM allows that assessment to be made quickly and accurately.
Investment committee submission. For PE-backed and corporate acquirers, the IM is often the document submitted internally to obtain approval to proceed to offer. Investment committees review IMs, not conversations. A well-structured IM with clear financial data, a defensible valuation narrative, and a coherent deal structure accelerates the internal approval process. An IM that requires the buyer to reconstruct the financial story before they can present it internally delays that process — and delays cost transactions.
What the IM Is Not
The IM is not the data room. It does not contain the underlying management agreements, lease documents, staff contracts, or detailed financial records. Those are produced after heads of terms are signed and due diligence begins. The IM describes the asset; due diligence verifies it.
The asking price in the IM is also not the final price. It is the seller’s opening position, informed by the broker’s valuation. Buyers know this and will respond with their own view. The negotiation that follows is the process by which the transaction price is established.
The Acquisitions Group advises on the sale of estate and letting agencies across the UK. If you would like a confidential discussion about the value of your business, contact us today.