Due diligence
How to read an information memorandum
A practical checklist for reviewing the core document behind most private credit opportunities.
· 5 min read
Start with the source of repayment
Identify exactly how investors are repaid — refinancing, asset sale, operating cash flow or collection of receivables — and what happens if that source is delayed.
Then test the assumptions
Compare forecasts with historical performance. Check existing debt and whether it ranks ahead. Review the risk factors section carefully; it is often the most candid part of the document.
Finally, confirm what the document is: an information memorandum is not a subscription agreement. Investment terms are set only in formal legal documentation.
This article is general information, not investment advice. Private credit and alternative investments are illiquid and high risk. You may lose some or all of your capital. Indicative returns are not guaranteed.