CIMs: A New Pair of Glasses
Detailed Confidential Information Memorandums (CIMs) require collaboration between Sellers and their Investment Banker(s), and will provide prospective Buyers with enough information to make purchasing decisions. Highly effective CIMs consider the Buyers’ perspective throughout the preparation process; accordingly, CIMs must emphasize the value drivers of businesses and all decision-critical content and data. Motivated prospective Buyers expect at a minimum:
- Comprehensive Financials – the most important information; preferably prepared by an independent CPA; normalized and recast; asset listing
- Desired Transaction – ownership/key personnel post-transaction intentions; relationship transferability; outline buyer deliverables
- Define the Core Business – value drivers; various revenue streams; unique processes, technologies, or equipment; niche focus
- Major Contracts or Customers – diversified or concentrated; percentage of revenue; client loyalty
- Marketplace & Growth Opportunities – strengths/ weaknesses; CAPEX requirements; growth vision
The mergers and acquisitions sale processes with the fewest “surprises” depend on meticulous planning and preparation. Therefore, it is imperative that Sellers and their M&A Team understand what prospective Buyers look for in businesses in order to construct the most impactful Confidential Information Memorandum.