Why the document exists
Without a memo, a sale is a three-week email thread in which a buyer asks the same fifteen questions one at a time, each answer arrives without context, and the two facts you would rather have introduced yourself — the churn rate and the large customer — surface as discoveries. Discoveries are priced differently from disclosures. The memo compresses that thread into one document, which is worth days, and it anchors the conversation on your framing: your definition of owner earnings, your churn measured the way you measured it, your range with the adjustments named. A buyer is free to disagree with any of it, and they are now disagreeing with a stated basis rather than proposing one.
There is an honest limit to that. A memo does not raise the value of the business; it protects the value you already have from being discounted for uncertainty. On the $301,000 example used across this site, the two drags a buyer prices hardest are worth $136,500 between them — no document argues those away. What the document does is stop a third discount being applied for the things nobody could see.
The anatomy, in five parts
| Part | Sections | What it has to establish |
|---|---|---|
| What this is | 01–04 | Product in a sentence, what transfers, the stack a new owner inherits, and how the revenue is contracted. |
| What it earns | 05–06 | Revenue, gross margin, owner earnings with add-backs stated, and a growth trend that matches the export. |
| Whether it lasts | 07–09 | Revenue churn with cohorts, implied customer life, concentration with contract terms, and unit economics from your data. |
| What owning it involves | 10–11 | Hours per week by task, support volume, and every task only you can currently do. |
| What could go wrong, and what it is worth | 12–15 | Risks with mitigations, upside you have not taken, the valuation basis adjustment by adjustment, and how the process runs. |
The section numbers are the fifteen sections of the ValuePulse Exit Memo, listed individually with what a buyer checks in each on the exit memo template page. Two of them are worth more attention than the rest and are the two small-business memos handle worst: 05, because an owner-earnings figure with unstated add-backs has every other number treated as promotional, and 12, because a risk list you wrote yourself is the cheapest protection available against a re-trade.
What to disclose before an NDA, and what to hold
| Information | Before an NDA | Why |
|---|---|---|
| Metrics: MRR, growth, churn, margin, months live, concentration as a percentage | Send it | This is what qualifies a buyer. Withholding it wastes your time and reads as though the numbers are bad. |
| Category and customer type, without naming the product | Send it | Enough for a buyer to know whether it fits their thesis. |
| Valuation range and the basis for it | Send it | It sets the frame early and filters out buyers whose number is a different order of magnitude. |
| Product name, domain, screenshots, repository | After an NDA | Identifying detail is what a competitor wants and the one thing you cannot take back. |
| Customer names, and the exact revenue of the largest account | After an NDA | Your customers did not agree to be part of a sale process. Anonymise to shares of revenue. |
| Full exports, cohort data, contracts, P&L | Diligence | These are diligence materials. List that they exist and hand them over when there is an offer to test. |
| Credentials, internal URLs, security detail | Never in a document | There is no stage of a sale process at which this belongs in a file that gets forwarded. |
A short mutual NDA at this size is normal, takes minutes, and is not the same thing as exclusivity. Never grant exclusivity to get an NDA signed.
Why the advisory guides read as overkill
Almost every CIM guide you will find is published by an advisory or brokerage firm, and it is written for the deals those firms take: a banker-run sell-side process, a data room, a management team to present, a buyer universe of funds, and earnings measured in millions rather than in tens of thousands. That is why the advice includes a market-landscape chapter, a five-year financial model and a competitor matrix. None of it is wrong; it is written for a different transaction. The scale gap is arithmetic. The example business on this site earns $84,000 of owner earnings a year and values at $274,000–$328,000; a banker, a data room and a management presentation are not costs a transaction that size can carry. On that same example a success fee is $30,100–$45,150, using the 10%–15% band those firms publish, including FE International, 21 Jan 2026.
- 01The market chapter goes. Your buyer already knows the category, or they are not your buyer.
- 02The five-year model goes, and is replaced by one line: current run rate, current churn, no heroics, labelled as arithmetic.
- 03Retention gets longer, not shorter. It is the section that decides your multiple, and it is the one a small memo usually gives three sentences.
- 04Owner involvement becomes a real section with hours in it, because at this size the buyer is often buying a job and needs to know its size.
- 05Concentration becomes a named disclosure rather than a footnote. Above 30% of revenue from one customer it changes the structure of the offer, not just the price.
- 06The valuation section shows its work. A fund accepts a banker's range; an individual spending their own savings wants the adjustments.
The mistakes that cost money at this size
- 01Leaving the concentrated account for diligence to find. On the example above, one customer at 42% of revenue is worth about $66,000 of the range; disclosed with a signed renewal next to it, far less.
- 02Reporting churn as one number. 4.7% monthly revenue churn instead of 3.2% costs about $90,000 on that same business — and a buyer who cannot see the voluntary and failed-payment split assumes the expensive composition.
- 03Owner earnings without stated add-backs. Add your salary back, then subtract what hiring out the work you actually do would cost. Both halves, in writing, or the figure is discounted to gross profit.
- 04A growth chart that does not match the processor export. Restated months are read as intent, not as tidying.
- 05Writing for a fund. Padding, jargon and a competitor matrix make an individual operator wonder what is underneath them.
- 06Sending it to one buyer. One offer is a valuation; two are a market. The memo is what makes reaching a second buyer cheap, because you are no longer starting the explanation from scratch.