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M&A Management Presentation: 5 Ways to Prepare  

By   Jack

Selling your business is a monumental decision, and if you’ve made the decision to sell, you want to ensure you do everything in your power to maximize the value you receive.

Your management presentation can make or break a deal and is a key part of the bidding process. But what is it exactly? And how can you create a presentation that will make a prospective buyer clamor to acquire your company?

In this post, I’ll walk through everything you need to know for a successful M&A management presentation.

What is an M&A management presentation?

An M&A management presentation is a comprehensive, engaging, and persuasive pitch that provides potential buyers with an in-depth understanding of your business. It showcases your company’s strengths, opportunities, and the management team’s expertise, demonstrating why your business is an attractive acquisition target .

Why is it called a “management” presentation? Because your management team is your company’s backbone. This presentation will highlight their prowess, proving they have the skills, knowledge, and passion to drive your business to new heights.

Keep in mind some of this info will have already been created in your Confidential Information Memorandum .

Why is a management presentation critical when selling your business?

Imagine you’re a potential buyer, sifting through dozens of acquisition opportunities. What would make a business stand out ? You guessed it – a compelling management presentation! It’s not only about the numbers; it’s about telling the story of your business, emphasizing the value you’ve created and the potential that awaits.

A well-crafted management presentation:

• Sets your business apart from the competition
• Showcases your company’s unique strengths and opportunities
• Provides an opportunity for your management team to shine
• Builds credibility and trust with potential buyers
• Opens the door for productive negotiation and higher valuations

What should be included in your management presentation?

Creating a persuasive management presentation requires a delicate balance of storytelling, data analysis, and showcasing your management team’s expertise. Here are the key points to include:

• Company overview : Introduce your business, its history, vision, mission, and core values. Paint a vivid picture of your company’s unique identity and culture. Include your product / service offerings, organization structure, target customers, and geographic reach.
• Market and industry analysis : Demonstrate your understanding of the market, including trends, opportunities, and threats. Establish your company’s position within the industry, and outline your competitive advantages . Include a SWOT analysis to further emphasize your company’s strengths and opportunities.
• Financial performance : Present historical and projected financial information, emphasizing growth, operating expenses, profitability , and value creation. Include key performance indicators, milestones, and any other relevant financial data. Be transparent about your financial performance to build credibility.
• Operations and processes : Describe your company’s core operations, processes, and systems , showcasing their efficiency and scalability. Detail your supply chain , manufacturing capabilities, and any intellectual property or proprietary technology you possess.
• Management team : Highlight the experience, skills, and achievements of your management team, proving they have the ability to lead and grow the business. Include their background, areas of expertise, and any industry recognition or awards they have received.
• Growth strategy and opportunities: Present a clear and achievable growth strategy, detailing specific initiatives, timelines, and expected results. Include market expansion plans, new product development, or potential mergers and acquisitions.

How do you prepare for a management presentation?

The key to a successful management presentation is preparation. Here’s how to get started:

The best management presentations all have these pieces:

• Gather data and insights : Collect all relevant financial, operational, and market data to analyze and present in a compelling manner. This includes conducting thorough market research and competitive analysis to showcase your company’s position in the industry.
• Assemble your team : Involve your management team in the process, ensuring they are comfortable with the presentation’s content and can speak confidently about their areas of expertise. Encourage collaboration and open communication to create a cohesive and engaging presentation.
• Tell your story: Craft a narrative that captures your company’s unique value proposition, weaving it throughout the presentation to create a memorable and persuasive document. Use anecdotes, examples, and case studies to illustrate your points and bring your story to life.
• Design an appealing presentation: Prioritize visual appeal by using a clean and professional design, incorporating visuals like graphs, charts, and images to enhance your presentation. Keep text to a minimum, using bullet points and concise language to convey your message effectively.
• Practice, practice, practice : Conduct rehearsals with your management team to refine the presentation and ensure everyone is confident in their delivery. Encourage feedback and make any necessary adjustments to improve the overall impact of the presentation.

Biggest mistakes in management presentations

• Overloading with information : While it’s important to provide a comprehensive view of your business, avoid overwhelming potential buyers with excessive detail. Focus on the most relevant and persuasive information to keep your audience engaged.
• Neglecting storytelling : Data alone won’t win the hearts of potential buyers. Weave a compelling narrative that brings your business to life, demonstrating its unique value proposition and potential for growth.
• Underestimating the importance of visuals : A picture is worth a thousand words. Use visuals like graphs, charts, and images to enhance your presentation, making it more memorable and impactful.
• Ignoring your management team : Your management team is a key selling point. Make sure they are involved in the process, well-prepared, and ready to shine in front of potential buyers.
• Failing to address potential concerns : Anticipate the questions and concerns potential buyers may have, and address them proactively in your presentation.

Frequently asked questions

How long should a management presentation be.

Aim for 30-40 slides, striking a balance between providing comprehensive information and maintaining your audience’s attention. Remember, less is often more.

Should I customize the presentation for each potential buyer?

Absolutely! Tailoring your presentation to the interests and priorities of each potential buyer can make a significant difference in the perceived value of your business .

Consider conducting research on each buyer’s past acquisitions, investment criteria, and strategic objectives to tailor your presentation accordingly.

How can I make my presentation stand out from the competition?

Focus on storytelling, create visually engaging slides, and showcase the unique aspects of your business, such as your management team, innovative processes, or untapped growth opportunities. It should look professionally designed.

Additionally, consider incorporating multimedia elements like video testimonials, customer success stories, or product demonstrations to further engage potential buyers. If possible, I’d say an in person meeting is far preferable to a Zoom equivalent.

Should I seek professional help in creating a management presentation?

If you’re unsure about your ability to create a persuasive and comprehensive presentation, consider engaging the services of an M&A advisor, consultant, or even a professional designer to guide you through the process and ensure your presentation effectively communicates your business’s value.

When should I start preparing my management presentation?

Ideally, begin preparing your management presentation several months before you plan to engage with potential buyers. This will give you ample time to gather data at a detailed level, involve your management team, and craft a compelling narrative that showcases your business’s strengths and opportunities.

How do I handle confidential information in my management presentation?

When sharing sensitive information, it’s crucial to maintain a balance between transparency and confidentiality. Consider providing potential buyers with a high-level overview of your business, reserving more detailed confidential information for subsequent discussions or after signing a non-disclosure agreement ( NDA ).

How do I handle questions or concerns during the presentation?

Encourage an open dialogue with potential buyers and address their questions or concerns as they arise. If you don’t have an immediate answer, assure the buyer that you will follow up with the information they need.

Demonstrating your willingness to engage in conversation and address concerns can help build trust and credibility with potential buyers.

What if I have limited experience with public speaking or presenting?

If you or your management team lack experience with public speaking, consider engaging a presentation coach or enrolling in a public speaking course (like Toastmasters ) to improve your skills.

Practice is also essential – rehearse your presentation multiple times to gain confidence in your delivery and become more comfortable with the content.

How can I gauge the effectiveness of my management presentation?

To assess the effectiveness of your management presentation, consider soliciting feedback from trusted M&A advisors or colleagues.

Analyze the level of engagement, interest, and questions from potential buyers during and after your presentation to identify areas that may need improvement or further clarification.

As we wrap, remember that a well-prepared and persuasive management meeting can be the key to unlocking the true value of your business when it’s time to sell.

By showcasing your company’s strengths, opportunities, and the expertise of your management team, you’ll be well on your way to securing the best possible outcome during the final bidding process.

Now, it’s time to tell your company’s story and make potential buyers believe in your vision.

Investor & Mentor

related posts:

SDE vs. EBITDA Adjustments: What Business Owners Should Know

Private sale vs. auction sale: what business owners should know, asset sale vs. share sale: what business owners should know, get in touch.

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What’s in a Confidential Information Memorandum (CIM)?

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Do you need strong writing skills to succeed in finance?

Not necessarily, but they certainly help.

But you definitely need strong reading comprehension skills , or you’ll miss crucial information and make the wrong decisions as a result.

Both of these skills intersect in the confidential information memorandum (CIM) that investment banks prepare for clients – the same CIM that you’ll be spending a lot of time reading in private equity, corporate development, and other buy-side roles.

There is surprisingly little information out there on what goes into a CIM, and there’s a lot of confusion over how you write one and how you read and interpret a CIM.

So here’s the full run-down, from how they are used in investment banking to private equity and beyond – along with a bunch of real-life CIMs:

What is a CIM?

The Confidential Information Memorandum is part of the sell-side M&A process at investment banks . It’s also known as the Offering Memorandum (OM) and Information Memorandum (IM), among other names.

At the beginning of any sell-side M&A process, you’ll gather information on your client (the company that has hired you to sell it), including its products and services, financials, and market.

You turn this information into many documents, including a shorter, 5-10 page “Executive Summary” or “Teaser,” and then a more in-depth, 50+ page “Confidential Information Memorandum.”

You start by sending the Teaser to potential buyers; if someone expresses interest, you’ll have the firm sign an NDA, and then you’ll send more detailed information about your client, including the CIM.

You can write CIMs for debt deals, as well as for distressed M&A and restructuring deals where your bank is advising the debtor .

You might write a short memo for equity deals , but not an entire CIM.

The Order and Contents of a Confidential Information Memorandum

The structure of a CIM varies by firm and group, but it usually contains these sections:

1) Overview and Key Investment Highlights

2) Products and Services

4) Sales & Marketing

5) Management Team

6) Financial Results and Projections

7) Risk Factors (Sometimes omitted)

8) Appendices

Debt-related CIMs will include the proposed terms – interest rates, interest rate floors, maturity, covenants, etc. – and details on how the company plans to use the funding.

What a Confidential Information Memorandum is NOT

First and foremost, a CIM is NOT a legally binding contract.

It is a marketing document intended to make a company look as shiny as possible.

Bankers apply copious makeup to companies, and they can make even the ugliest duckling look like a perfectly shaped swan .

But it’s up to you to go beneath the dress and see what it looks like without the makeup and the plastic surgery.

Second, there is also nothing on valuation in the CIM.

Investment banks don’t want to “set the price” at this stage of the process – they would rather let potential buyers place bids and see where they come in.

Finally, a CIM is NOT a pitch book . Here’s the difference:

Pitch Book : “Hey, if you hire us to sell your company, we could get a great price for you!”

CIM: “You’ve hired us. We’re now in the process of selling your company. Here’s how we’re pitching it to potential buyers and getting you a good price.”

Why Do CIMs Matter in Investment Banking?

You will spend a lot of time writing CIMs as an analyst or associate in investment banking.

And in buy-side roles, you will spend a lot of time reading CIMs and deciding which opportunities are worth pursuing.

People like to obsess over modeling skills and technical wizardry, but in most finance roles you spend FAR more time on administrative tasks such as writing CIMs (or reading and interpreting CIMs).

In investment banking, you might start marketing your client without creating a complex model first (Why bother if no one wants to buy the company?).

And in buy-side roles, you might look at thousands of potential deals but reject 99% of them early on because they don’t meet your investment criteria, or because the math doesn’t work .

You spend a lot of time reviewing documents and comparatively less time on in-depth modeling until the deal advances quite far.

So you must be familiar with CIMs if your job involves pitching or evaluating deals.

Show Me the Confidential Information Memorandum Example!

To give you a sense of what a CIM looks like, I’m sharing six (6) samples, along with a CIM template and checklist:

• Consolidated Utility Services – Sell-Side M&A Deal
• American Casino – Sell-Side M&A Deal
• BarWash (Fake company) – Sell-Side M&A Deal
• Alcatel-Lucent – Debt Deal
• Arion Banki hf (Icelandic bank) – Debt Deal
• Pizza Hut – Debt Deal
• Sample Deal – CIM Template
• Information Memorandum Checklist

To find more examples, Google “confidential information memorandum” or “offering memorandum” or “CIM” plus the company name, industry name, or geography you are seeking.

Picking an Example CIM to Analyze

To illustrate how you might write a CIM as a banker and how you might interpret a CIM in buy-side roles, let’s take a look at the one above for Consolidated Utility Services (CUS) .

This one has the standard sections, though it omits the Risk Factors and Appendices, resulting in a somewhat shorter (!) length of 58 pages.

This CIM is ancient, so I feel comfortable sharing it and explaining how I would evaluate the company.

CIM Investment Banking: How Do You Create Them?

This CIM creation process is quite tedious for bankers because it consists of a lot of copying and pasting from other sources .

You’ll spend 90% of your “thinking time” on just two sections: the Executive Summary / Investment Highlights in the beginning and the Financial Performance part toward the end.

You may do additional research on the industry and the company’s competitors, but you’ll get much of this information from your client; if you’re working at a large bank, you can also ask someone to pull up IDC or Gartner reports.

Similarly, you won’t write much original content on the company’s products and services or its management team: you get these details from other sources and then tweak them in your document.

The Executive Summary section takes time and energy because you need to think about how to position the company to potential buyers.

You attempt to demonstrate the following points:

• The company’s best days lie ahead of it. There are strong growth opportunities, plenty of ways to improve the business, and right now is the best time to acquire the company.
• The company’s sales are growing at a reasonable clip (an average annual growth rate of at least 5-10%), its EBITDA margins are decent (10-20%), and it has relatively low CapEx and Working Capital requirements, resulting in substantial Free Cash Flow generation and EBITDA to FCF conversion.
• The company is a leader in a fast-growing market and has clear advantages over its competitors. There are high switching costs, network effects, or other “moat” factors that make the company’s business defensible.
• It has an experienced management team that can sail the ship through stormy waters and turn things around before an iceberg strikes.
• There are only small risks associated with the company – a diversified customer base, high recurring revenue, long-term contracts, and so on, all demonstrate this point.

If you turn to “Transaction Considerations” on page 10, you can see these points in action:

“Top-Performing, Geographically Diverse Industry Leader” means “less risk” – hopefully.

Then the bank lists the industry’s attractive growth rates, the company’s blue-chip customers (even lower risk), and its growth opportunities, all in pursuit of the five points above.

The “Financial Performance” Section of the CIM

The “Financial Performance” section also takes up a lot of time because you have to “dress up” a company’s financial statements… without outright lying.

So it’s not as easy as pasting in the company’s historical financial statements and then making simple projections – think “reasonable spin.”

Here are a few examples of “spin” in this CIM:

• Only Two Years of Historical Statements – You normally like to see at least 3-5 years’ worth of performance, so perhaps the bankers showed only two years because the growth rates or margins were lower in the past, or because of acquisitions or divestitures.

• Recurring Revenue / Contract Spin – The bankers repeatedly point to the high renewal rates, but if you look at the details, you’ll see that a good percentage of these contracts were won via “competitive bidding processes,” i.e. the revenue was by no means locked in. They also spin the lost customers in a positive way by claiming that many of those lost accounts were unprofitable.
• Flat EBITDA and Adjusted EBITDA Spin – EBITDA stayed the same at $6.9 million in the past two historical years, but the bankers spin this by saying that it remained “stable” despite significantly higher fuel costs… glossing over the fact that revenue increased by 8%. Figures like “Adjusted EBITDA” also lend themselves to spin since the adjustments are discretionary and are chosen to make a company look better.
• Highly Optimistic Projected Financials – They’re expecting revenue to grow by 7.5% each year, and EBITDA to increase from $8.3 million to $12.6 million over the next five years – despite no EBITDA growth in the last historical year.

As a banker, your job is to create this spin and portray the company favorably without going overboard.

Does Any of This Make a Difference?

Yes and no.

Buyers will always do their due diligence and confirm or refute everything in the CIM before acquiring the company.

But the way bankers position the company makes a difference in terms of which buyers are interested and how far they advance in the process.

Just as with M&A deals, bankers tend to add more value in unusual situations – divestitures, distressed/turnaround deals, sales of family-owned private businesses, and so on.

Example: In a sell-side divestiture deal, the subsidiary being sold is always dependent on the parent company to some extent.

But in the CIM, bankers have to take care with how they describe the subsidiary.

If they say, “It could easily stand on its own, no problem!” then more private equity buyers might show an interest in the deal and submit bids.

But if the PE firms find out that the bankers were exaggerating, they might drop out of the process very quickly.

On the other hand, if the bankers say that it will take significant resources to turn the subsidiary into an independent company, the deal might never happen due to a lack of interest from potential buyers .

So it’s a careful balancing act between hyping up the company and admitting its flaws.

How Do You Read and Interpret the Confidential Information Memorandum in Private Equity and Other Buy-Side Roles?

You will receive A LOT of CIMs in most private equity roles, especially at middle-market and smaller funds.

So you need a way to skim them and make a decision in 10-15 minutes about whether to reject the company upfront or keep reading.

I would recommend these steps:

• Read the first few pages of the Executive Summary to learn what the company does, how big it is in terms of sales, EBITDA, cash flow, etc., and understand its industry. You might be able to reject the company right away if it doesn’t meet your investment criteria.
• Then, skip to the financials at the end . Look at the company’s revenue growth, EBITDA margins, CapEx and Working Capital requirements, and how closely FCF tracks with EBITDA. The financial projections tend to be highly optimistic, so if the math doesn’t work with these numbers, chances are it will never work in real life.
• If the deal math seems plausible, skip to the market/industry overview section and look at the industry growth rates, the company’s competitors, and what this company’s USP (unique selling proposition) Why do customers pick this company over competitors? Does it compete on service, features, specializations, price, or something else?
• If everything so far has checked out, then you can start reading about the management team, the customer base, the suppliers, and the actual products and services. If you make it to this step, you might spend anywhere from one hour to several hours reading those sections of the CIM.

Applying the Analysis in Real Life

Here’s you might apply these steps to this memo for a quick analysis of CUS:

First Few Pages: It’s a utility services company with around $57 million in revenue and $9 million in EBITDA; the asking price is likely between $75 million and $100 million with those stats, though you’d need to look at comparable company analysis to be sure.

There has been solid revenue and EBITDA growth historically, but the company was formed via a combination of smaller companies so it’s hard to separate organic vs. inorganic growth.

At this point, you might be able to reject the company based on your firm’s investment criteria: for example, if you only look at companies with at least $100 million in revenue, or you do not invest in the services sector, or you do not invest in “roll-ups,” you would stop reading the CIM.

There are no real red flags yet, but it does seem like customers are price-sensitive (“…price is generally one of the most important factors to the customer”), which tends to be a negative sign.

Financials at the End: You can skip to page 58 now because if the deal math doesn’t work with management’s highly optimistic numbers, it definitely won’t work with realistic numbers.

Let’s say your fund targets a 5-year IRR of 20% and expects to use a 5x leverage ratio for deals in this size range.

The company is already levered at ~2x Debt / EBITDA, so you can only add 3x Debt / EBITDA.

If you do the rough math for this scenario and assume a $75 million purchase price:

A $75 million purchase enterprise value represents a ~9x EV / EBITDA multiple, with 3x of additional debt and 2x for existing debt, which implies an equity contribution of 4x EBITDA (~$33 million).

If you re-sell the company in five years for the same 9x EBITDA multiple, that’s an Enterprise Value of ~$113 million (9x * $12.6 million)… but how much debt will need to be repaid at that point?

To answer that, we need the company’s Free Cash Flow projections… which are not shown anywhere.

However, we can estimate its Free Cash Flow with Net Income + D&A – CapEx and then assume the working capital requirements are low (i.e., that the Change in Working Capital as a percentage of the Change in Revenue is relatively low).

If you do that, you’ll get figures of $3.9, $3.6, $3.8, $4.5, and $5.1 million from 2007 through 2011, which adds up to $21 million of cumulative FCF.

But remember that the interest expense will be significantly higher with 5x leverage rather than 2x leverage, so we should probably reduce the sum of the cumulative FCFs to $10-$15 million to account for that.

Initially, the company will have around $42 million in debt.

By Year 5, it will have repaid $10-15 million of that debt with its cumulative FCF generation. We’ll split the difference and call it $12.5 million.

At a 9x EV / EBITDA exit multiple, the PE firm gets proceeds of $113 million – ($42 million – $12.5 million), or ~$84 million, upon exit, which equates to a 5-year IRR of 20% and a 2.5x cash-on-cash multiple.

I would reject the company at this point.

• Even with optimistic assumptions – the same EBITDA exit multiple and revenue and EBITDA growth above historical numbers – the IRR looks to be around 20%, which is just barely within your firm’s desired range. And with a lower exit multiple or more moderate growth, the IRR drops below 20%.
• The EBITDA growth looks fine, but FCF generation is weak due to the company’s relatively high CapEx, which limits debt repayment capacity.
• It seems like the company doesn’t have much pricing power, since quite a few contracts were renewed via a “competitive bid cycle process.” Low pricing power means it will be harder to maintain or improve margins.

On the other hand, you might look at this document and interpret it completely differently.

The numbers don’t seem spectacular for a standalone investment, but this company could represent an excellent “roll-up” opportunity because there are tons of smaller companies offering similar utility services in different regions (see “Pursue Additional Add-on Acquisitions” on page 14) (for more, see our tutorial to bolt-on acquisitions ).

So if your firm focuses on roll-ups, then perhaps this deal would look more compelling.

And then you would read the rest of the confidential information memorandum, including the sections on the industry, competitors, management team, and more.

You would also do a lot of research on how many smaller competitors could be acquired, and how much it would cost to do so.

These examples should give you a flavor of what to expect when you write a confidential information memorandum in investment banking, or when you read and interpret CIMs in private equity.

I’m not going to say, “Now write a 100-page CIM for practice!” because I don’t think such an exercise is helpful – at least, not unless you want to practice the Ctrl + C and Ctrl + V commands.

So here’s what I’ll recommend instead:

• Pick an example CIM from the list above, or Google your way into a CIM for a different company.
• Then, look at the Executive Summary and Financial Performance sections and find the 5-10 key areas where the bankers have “dressed up the company” and spun it in a positive light.
• Finally, pretend you’re at a private equity firm and follow the decision-making process I outlined above. Take 20 minutes to scan the document and either reject the company or keep reading the CIM.

Bonus points if you can locate typos, grammatical errors, or other attention-to-detail failures in the memo you pick.

Any questions?

You might be interested in a detailed tutorial on investment banking PowerPoint shortcuts .

About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

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45 thoughts on “ What’s in a Confidential Information Memorandum (CIM)? ”

Hi Brian. I notice that the Debt IMs barely have any financial forecasts/projections (the vast majority of financials are historical), while all the M&A ones have them. Perhaps it reflects the fact that M&A involves much more modeling than DCM, isn’t it?

I don’t really think that’s it. The style of debt IMs is just different, and while DCM has far less modeling work than M&A, that’s mostly because DCM is a markets role that mostly consists of updating slides and interacting with other groups at the bank. There may be some requirement that debt IMs do not show projections as well (not sure about that).

Great article.

I’m in the process of applying to PE and LevFin/Credit firms (Ireland).

I was informed that the final recruitment stage in these often includes a CIM analysis.

I was wondering how would you alter the analysis steps that you outlined above for a LevFin/Credit firm? I’m assuming it would be quite different since you’re looking much more at the chances of the company surviving if you leverage it up.

Focus more on the downside and extreme downside cases and see if the company can survive even if revenue drops by 50%+, or some other very high level. The base and upside cases don’t really matter because there’s no additional benefit to creditors in those.

Hey Brian, great article as always- I really appreciate it.

Do you happen to have access to other old CIMs you could link? Thanks!

Everything we have is linked to here.

OMG this website, and the articles are great! Concrete and detailed:)

Thanks for reading!

FYI: Was interested in your free 57 pager, but the link is not working for me even after inputting my name, valid email address and checking the box..others may be experiencing a similar problem, just a heads-up, cheers.

I am not sure about that one – the link seemed to work when I just tried it. You can email us to download it if the form is still not working.

The Article was very helpful. Thanks for putting it up. I am a CPA from India and trying my hand at a very small equity cum debt infusion in a company. Thanks once again.

For the assumption of 75-100 mil, how do we know if the assumption makes sense or not. Is there a reference range for that if we are given different revenue or EBITDA figures?

Just our own estimate based on average multiples in the sector.

Great article. However just wanted to make a small correction. At the end you used $21 million of FCF generated over 5 years to pay down $12.5 million of debt, which is fine, but you didn’t add the remaining FCF of $8.5 million in calculation of the ending equity value. The Ending Equity will then be $113mn – ($42.5 mn – $12.5mn) + $8.5mn = $91.5mn instead of the mentioned $84mn. This would bump up the multiple to 2.77x and IRR of 23%. Your point still stands though.

Thank you so much Brian for this article.

I have learned a lot about investment banking from your articles.

I would urge you to please share one more video for writing an industry report/power point presentation skills on how to create the attractive diagrams (However, I have seen two of your videos on ppt skills).

Also is there any video/article on competitive benchmarking, trading & transaction comps and market sizing.

Once again thank you so much for your contribution towards learning.

We have a full course on PowerPoint if you want to learn more. Our modeling courses cover some of the other topics. Beyond that, we may create more YouTube videos, but there is only so much we’ll give away for free (why would anyone ever sign up for the paid courses if we just gave away everything?).

Thanks so much Brian. You are very generous and humble.

Hello Brian: I’m in greater Boston (to the south) I’m currently seeking assistance creating a CIM for a low-end mid-market business, very well-established and growing fast, 2016 revenue $15.5MM, 2017 ~$20MM. Ideally, I want to have some actual interaction with the person. Can you suggest the best way to find such a person. I’m seeking to find a person with talent who reads stuff your for enjoyment. Thank you kindly. W,

We do not advise on the creation of CIMs. I would recommend contacting boutique banks in your area and requesting the services of one who creates CIMs for small businesses.

Hi Warren, feel free to touch base with me at MidCap Advisors. I’d be happy to help any way I can.

Thanks Brian, another great insider perspective on the important financial documents – as a marketer helping clients to sell deals or launch new offerings it’s been hard making sense of some of the investment terminology – your site has been a big help, and I’ve just signed up for the powerpoint course which looks fantastic – again I used powerpoint all day but mostly for webinars and video presentations, so getting the more formal and structured elements right for a pitch deck was something I needed some expert insight on and I came to the right place. Great work!

Thanks for signing up!

From buyside’s perspective, what’s a relatively low CapEx and Working Capital requirements that’s good for possible investment? Does it depend on the industry? If so, what are those numbers for various industries?

Also when you mentioned watch “how closely FCF tracks with EBITDA” what do you mean by that? Can you show an example?

Your questions are beyond the scope of what we can answer here, but, broadly speaking, lower capital requirements are better because they make the company’s cash flow higher, meaning it can pay off more debt and generate more cash. The exact numbers differ greatly based on industry and company stage. If FCF follows EBITDA closely it’s easier to estimate the investment returns because you can use EBITDA as a proxy for debt pay-down/cash generation.

Would you advise to write the Executive Summary of the CIM as early as possible or would you wait until all sections of the CIM are covered to extract the Exec Summary?

Write a draft of the summary section, then the rest of the CIM, and then come back and revise the summary.

Being a former banker and a recent PE joinee, this hits bang on the spot. Brings back my memories of the CIM prep (we generally refer to it as IM in India) with other fellow associates, sitting late into the night, chatting, fighting (even on points like font sizes) and positioning the company, taking pride in our work till the next day the VP turns and asks to completely re-draft the whole thing.. to the stage where it satisfies the VP.. but the Partner then turning back and requesting you to again change the IM with the final version resembling close to the one that you had originally prepared. Man.. those were the days..

Thanks! Yes, CIM prep is always fun… until you find out you have to re-do the whole thing, and then re-do it again when someone else gets pissed off. And then you realize it doesn’t matter since no one reads it anyway.

What documents are significant for IB/PE/Corp Dev?

CIMs, Pitch Books, Letters of Intents, Definitive Agreements, Business Plans, Term Sheets, Private Placement Memos, Prospectus, Credit Memos, etc…?

Did I leave out anything?

Those are the main ones. Management Presentations are also important (condensed and more visual/impactful version of a CIM that’s intended for management teams to use when pitching their company).

Brian, great article with valuable Information. Yep all-niters are not very uncommon when drafting CIMs and the work with the right version is even more challenging (with a lot of remarks). Back in my days when I started in IB word was the dominating source for making CIMs, in recent years it has shifted to ppt (at least in Europe).

Thanks! Yes, it seems like PowerPoint is more common for CIMs in Europe. Not sure why – maybe just higher design standards?

Guess that would be one of the reasons.

Also, IMO, i guess that PPT features such as headers and the possibility to split extensive topics in more slides (still following the same rationale, of course) make the reading so much easier than in MS Word…guess that a more dynamic and straight to the point CIM is always the best option when you’re looking for a specific data

Great text, btw

Great post as always Brian! I have followed the site since I first entered university 3 years ago. Very valuable source of information! It contributed greatly to me breaking into IB as an M&A Associate. And with the stuff I read now becomes one I practice..having a Déjà vu reading this.

Thank you for your generosity in sharing these information Brian, keep up the good work.

Thanks, glad to hear it! Yes, after a while you start dreaming about CIMs..

Funny to notice that all CIMs are in word format. Correct me if I’m wrong, but I think this is more common in the US. In my short 1 year experience in Europe (London), I’ve only seen CIMs on powerpoint. Have to agree with KG, in ppt you can make more visually appealing and especially spend less time on wording and rephrasing.

Great article again, learning lots of stuff reading M&I as a student and still now as an analyst!

Thanks! Yes, you’re right that CIMs in Word format are more common in the US. But even in other countries, Word is still quite common (see the example above fore that bank in Iceland). PowerPoint-formatted CIMs do likely take up a greater percentage of the total, though.

It’s interesting how CIMs in the U.S. seem dull, and are rather ugly. In Canada, IPO CIMs in particular, are rather slim and colourful, and make us push the boundaries of what you can achieve with PowerPoint and Excel charts. They are mostly targeted at retail and HNW financial advisors with short attention spans, but, by law, they can’t state anything that is not in the prospectus.

I can think of 2-3 bulge bracket banks that take good care in making these marketing documents appealing, and in some groups at my bank, they have become bona fide masterpieces in Microsoft Office graphic design and the ability to distill the essence of entire paragraphs of information into single bullet points.

Since I started making them I realized that obsessing over presentation and clarity in writing my own resume was perfect training for this type of work, and that investors and/or their advisors look at new deals similarly to how recruiters look at resumes.

Yup that is true, but I think you pinpointed the reason why right there: IPOs are often aimed at retail and HNW advisers, not private equity firms or corporate development teams at Fortune 500 companies. So inevitably there will be more attention-grabbing features and the design will look better.

Also, for IPOs often the nitty-gritty details matter a bit less because no one is buying 100% of the company… so there may be more focus on the design instead of detailed financial analysis.

Thanks for pointing this out – I’ve been surprised at how boring these are because it seems like an easy place to differentiate and get attention – although obviously you need to be taken seriously too. Can you point to some example Canadian CIMs to compare KG?

Great read. Keep it going

This is a great read. As a a former IB guy, this hits so close to home I am getting flashbacks to the CIM drafting sessions I had for the deals I worked on (for deals closes and those that stalled out). Would recommend other people interested in going into the field to read this article (or even exiting the field to buyside)….

Thanks! Glad to hear it. Yes, late-night CIM sessions are always a good time…

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How to Prepare an M&A Management Presentation

Merger and acquisition (M&A) management presentations provide critical pieces of information to prospective investors who are considering either investing or buying your SaaS business and or SaaS product. Depending on the size of the potential deal, a SaaS company may engage an investment bank to help put this together, or it may lay solely on the shoulders of a founder. In any event, creating an M&A management presentation that paints a SaaS business in the best possible light is a heavy lift for everyone involved. 

The article will review the role of M&A management presentations and its key elements, such as financial information, value proposition, crafting an engaging narrative, and ways to build trust with potential investors and buyers. 

The Role of Management Presentations

Management presentations are essential components of the M&A process, giving potential investors and buyers a chance to hear from management and get insights into a company’s current performance, future plans, and projected performance. The management presentation will typically be the first step in a potential M&A transaction and is commonly called a Confidential Information Memorandum (CIM). The idea is to give prospective investors and buyers enough detail to allow them to determine if the SaaS business or product is something they may be interested in. 

By presenting an informative and well-prepared management presentation, a SaaS business helps create trust and credibility with prospective bidders, which will benefit the eventual deal to be negotiated. 

Key Elements in a Successful Presentation

M&A management presentations will commonly include the following information, but not limited to:

• Overview of the SaaS company and market
• Current strategy and opportunities for growth
• Current SaaS products and services
• Leadership team and organization structure
• Past financial performance, forecast and SaaS specific metrics. 

While each section of the management presentation is important and serves a purpose, it goes without saying it will be of keen interest to all potential investors or buyers. 

Preparing Your Financial Information

Even the most seasoned SaaS may not have their bookkeeping and financial records up to date. Well before a SaaS is considering selling, an effort should be made to clean up its financial house. With the financial house in order with prepared financial statements, a SaaS business can focus on the most important part of the M&A process, getting the best bid and sale price possible. 

Historical Financial Performance

Potential investors and buyers need to see how well a SaaS business has financially performed in the past and how the financial performance is trending. This information should be provided in an easy-to-consume fashion in the management presentation; however, this information will be pulled from prior period financial statements. Common financial statement ratios such as liquidity and leverage ratios will provide greater insight into the financial performance of the company. SaaS businesses should also consider including SaaS-specific metrics such as the Rule of 40 and SaaS Magic Number . These industry-specific metrics provide valuable insight into the SaaS business and allow prospective investors or buyers to be able to compare the results with industry peers. 

Creating a Comprehensive Forecast

It’s critical to include thorough forecasts in the management presentation, which should be taken from a very detailed and accurate financial model that is typically created and managed in Microsoft Excel. This comprehensive forecast needs to include forecasted revenue by product line with assumptions about customer churn rates , upsells and cross-sells , etc., along with Cost of Goods Sold (COGS) and OpEx/overhead expenses such as General and administrative (G&A)

Showcasing Your Company’s Unique Value Proposition

In an M&A management presentation, it is critical to articulate the company’s distinct value and show prospective investors why they should be interested in either investing or buying the business. 

Identifying the Competitive Advantage

Identifying what sets the SaaS business or product apart from others in the industry helps reinforce the company’s unique value proposition. To identify and showcase this competitive advantage, the management presentation should clearly state where the business stands in the market, customer demographics, and how it prices products or services offered compared with rival firms. 

Crafting a Compelling Narrative

For a management presentation to be successful, it is essential for its overall narrative to be informative and captivating. To achieve this goal and create an impact on potential buyers, both intellectually and emotionally, management can voice over certain slides and information with storytelling techniques in combination with visual aids. This may include a short story on how the SaaS received recognition or awards for providing excellent customer service. 

In order to craft memorable presentations that influence investors, we will explore different ways of narrating stories along with illustrating the importance of visuals/designs in M&A management presentations. 

Storytelling Techniques

The importance of using storytelling tools, such as metaphors and anecdotes, in management presentations should not be underestimated. These techniques can help simplify concepts for potential buyers and help create an emotional impact whereby the information and presentation will be more easily remembered. 

Visual Aids and Design

When creating a management presentation for investors, incorporating visual aids and professional design elements can be beneficial. These could include charts, graphs, diagrams, photographs, or videos to help communicate complex concepts and information more effectively. They may also emphasize important points while captivating the audience’s attention at an in-person meeting. For optimal results, it is key to maintain simplicity and clarity when utilizing these visual aids, such as using easy-to-read and consistent fonts. 

Building Trust and Credibility

Successful M&A management presentations must help establish trust and credibility with prospective buyers. To help achieve this aim, when delivering a presentation, it is important to address any known reservations or doubts held by potential investors and how the business believes these apprehensions can be remedied. By addressing this head-on, the business will convey assurance these concerns can be addressed and continue to build trust through openness and transparency. 

Demonstrating Integrity and Commitment

Another effective method to demonstrate integrity and commitment is through the emphasis on ethical and integrity-based practices. Revealing that management is reliable, moral, faithful, and committed continues to build trust with prospective investors or buyers. Now, this wouldn’t typically be a slide that says the business has these values but rather shown through the review of the management presentation. This may include not using confusing notes to financial or other information presented that clouds the information provided, using realistic forecast assumptions such as growth estimates, and being able to answer questions directly and succinctly. 

To create a successful M&A management presentation that stands out to potential buyers and investors, careful planning, drafting, and review are essential. A thorough understanding of the company’s financials is required, as well as an appealing value proposition and narrative. Lastly, demonstrating trustworthiness is essential to make any potential transaction as smooth as possible, and to create an environment where investors and buyers can confidently bid for the SaaS business – ideally, at the higher end of internal valuations. 

Frequently Asked Questions

What is a management presentation in m&a.

An M&A management presentation is where the sell side presents relevant high-level information to potential investors and buyers, the buy side. The presentation answers commonly asked questions and portrays the business in the best possible light.

What are some storytelling techniques that can enhance my management presentation?

Employing analogies, similes, metaphors, and stories can assist in rendering a complex management presentation easier for the audience to comprehend and relate to. It also helps make it more accessible by providing relatable comparisons.

How can I address concerns and doubts during the M&A management presentation?

For the management presentation, it is essential to demonstrate openness and truthfulness while providing current and accurate information. 

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What is a cim.

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What is a CIM and how is it used in the Mergers and Acquisitions (M&A) Process?

If you’re considering a sale of your business, it’s helpful to first understand the merger and acquisition (M&A) process and how an investment bank can help you navigate through the complicated buyer universe. One essential document in this process is the Confidential Information Memorandum (CIM) or increasingly a Confidential Information Presentation (CIP). For background on the M&A process and where the CIM falls on the deal timeline, check out this article: Step-by-Step Guide to the M&A Process .

Simply put, a CIM is a comprehensive presentation that serves as a marketing document during an M&A process . It is crafted by your advisor, in close conjunction with you and your management team, and outlines nearly everything a potential buyer would need to know before submitting an initial offer. In summary, the CIM should answer the question: “Why should a buyer be interested in your company?”

CIM Preparation as Part of the M&A Process

Source: Capstone Partners Research

Who creates the cim.

Creating a thoughtful, well-organized, and detailed CIM is a critical element of a successful sell-side effort. While time-consuming to create, the CIM engages and educates buyers and limits the need for detailed, individual discussions at the beginning of the process. A trusted M&A advisor with industry experience can be a significant asset and can help streamline the CIM writing process. Part of the investment banker’s role is to be in tune with the unique subsector trends of your business. The deal team can make or break a transaction in many cases, so you’ll want to surround yourself with experts that have a successful track record in your sector.

Part due diligence document, and part marketing collateral, the CIM is central to positioning the client for maximum market receptiveness. John Ferrara Founder & President, Capstone Partners

Why are CIM’s Important?

Your advisor will know how to optimally position your company to drive up the valuation through experience and knowledge of the buyer universe. Additionally, a veteran banker has the skills to effectively market your business to their vast network of qualified buyers in the space, further increasing your chances of receiving a competitive offer through a bidding war.

The investment banker prepares the CIM not just to sell, but to maximize value for their client by generating qualified interest from as many potential buyers as possible. An offer is only valuable if it comes from a buyer who truly understands your business and is willing to close on their proposed terms. A comprehensive CIM ensures that the buyer understands everything from the relevant experience of the management team, the company’s business model, the product or service differentiation, and the competitive dynamics of the sector. In addition to the granular detail and financial data that appears in a CIM, it also depicts the growth story of the company. The presentation provides details on the company’s history and ongoing initiatives.

What is Included in a CIM?

Every CIM is uniquely tailored to the unique differentiators that make the company a valuable and attractive asset. The CIM is custom-built to highlight the strengths and growth opportunities for the company. That said, there are a few common elements of a CIM that will help provide an all-encompassing presentation to effectively market your company:

• Executive Summary: Similar to an executive summary in a financial statement, this section provides a high-level sample of what’s to come. The executive summary includes the transaction overview, which showcases the target company’s transaction goals, management’s forward-looking plans, and most importantly the rationale for selling.
• Key Investment Considerations: The key investment considerations outline the unique aspects of a business that a potential buyer would find attractive and how it differentiates from the competition. This section will provide five-to-ten leading characteristics of the target company and will depend solely on the individual company and the industry they operate in. This should be thought of as the positioning portion of the CIM.
• Growth Opportunities: This section communicates major growth opportunities including expanding online presence, geographical expansion, or potential M&A opportunities. These points are derived from management’s input and depend on the individual company’s trajectory and should typically generate the most excitement (and scrutiny) from potential buyers.
• Company Overview: This section provides an opportunity to tell the story of the target company. In addition to the firm’s history, it offers specific details such as the company’s timeline, product differentiation, value-added capabilities, marketing strategy, and an introduction to the management team.
• Industry Overview: The industry overview provides a holistic view of the target company’s industry and highlights the size of the addressable market, industry growth trends, and competitive dynamics. Ideally, this section demonstrates that the industry is profitable and is forecast for substantial growth in the coming years.
• Financial Overview: The final section serves three main purposes:
•  To provide the target company’s historical financials which demonstrates the financial health of the company and is presented using  Generally Accepted Accounting Principles (GAAP).
• To provide a future forecast, ideally a five-year plan.
• To detail key performance indicators (KPIs) such as an adjusted EBITDA that the business is measured against.

Keep in mind that some sellers will choose to hire an outside financial consultancy firm, such as our Financial Advisory Services (FAS) Group , to make sure all financial statements are in order before they are publicly presented. This is often referred to as a sell-side quality of earnings (QoE) report which can serve as an impactful supplement to a CIM.

Planning Ahead

Although the majority of the workload for a CIM falls on the shoulders of the deal team, it’s important to be ready to fill in the gaps with information specific to your company. Making sure all the information is uploaded to a Data room, a file-sharing software, so that it is readily available for your advisors will save time and headache. Taking these steps earlier rather than later, will not only lead to a more complete CIM, but an expedited M&A process. By combining your personal experience as a business owner with your advisor’s knowledge of the buyer universe, you will be able to create a one-of-a-kind CIM for the buyers and achieve uncommon results.

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Write a Winning M&A Management Presentation

February 13, 2023

Are you looking for a new owner, scale-up funding or new financing for your business? If so, you need to invest in creating the best M&A management presentation your prospective investor has seen.

Really effective management presentations are like great cvs. they won’t get you the job, but they make the right impression to get you through the door, into the board room and onto the agenda . great management presentations do this by making your audience want to find out more., every management team and business is different. that means there’s no simple template or formula that you can copy for your management presentation.   don’t believe people who tell you there is.

We’ve pulled these seven tips from the 15+ years’ experience of the team at Benjamin Ball Associates. Our management presentation coaching specialists have reviewed thousands of management presentations, and we know that small changes make a big difference . Incorporating these tips can make the difference between getting relegated to the ‘no’ pile, or having an investor take the next step to investing with you.

How to write a winning management presentation Your management presentation should sell the investment, not your product Keep your M&A management presentation simple Be clear what makes you special in your presentation Don’t let your management presentation be boring Appeal to the heart AND the head in your management presentation Be honest in your management presentation Show, don’t tell

Best management presentation tip #1: Sell the investment, not the product

Investors are selfish. Your product may well change the world, but the investor is primarily thinking about their own risk and reward. This means that when they listen to you, they are subconsciously asking the question: ‘what does this mean for me’?

The best management presentations present everything in an investor-first context.

• So instead of slides that talk about your plans and ambitions, frame the information in terms of how those plans and ambitions will impact your investor’s returns.
• Instead of listing your team’s background, demonstrate how that background makes you a safe pair of hands for a new owner.
• Got great sales forecasts? Show how those forecasts will translate into rewards for investors.

Grab and hold their attention by using the language of M&A and investment and focusing on the things that matter most to potential buyers.  Read how to create a great pitch document.

Contact us for a free consultation on your coaching needs

Best management presentations tip #2: Keep it simple

Investors don’t put their cash into opportunities they don’t understand. If you present a concept in a difficult or complicated way , the mental exertion feels painful or makes them uneasy. Investors associate this with a negative gut instinct about you or your opportunity. That road leads to a ‘no’.

Instead, make the investment proposition easy to grasp . Clarity and ease of mental digestion feels good – That means investors will associate positive feelings with you and your opportunity .

So how do you transform a complex business into a simple management presentation?

When Steve Jobs was trying in 1990 to explain the impact that computers would have on the world, he spoke about bicycles. He described how humans are inefficient movers compared to many other animals on the planet. A human on a bicycle, though, can move even more efficiently than a condor. And a computer is like a bicycle for the human mind.

This analogy used a familiar concept (bicycles) to make an unfamiliar concept (computers in 1990) relatable. Analogies are one of several tools that help communicate complex ideas more effectively. Others are metaphors, similes and stories. No matter how complicated or abstract your product is, there is a way of presenting it in a simple, visual and engaging way. Use these ideas in your management presentations.

Best M&A management presentations tip #3: Be clear what makes you special

We find senior executives are frequently too close to their business to uncover the red thread that needs to run through their management presentation to make it exciting for investors. This is especially true for people wanting to sell their business . That’s where we help them discover their red thread and turn in into a seam of gold. What is the secret sauce that drives your success? Perhaps it’s your team, your IP, your connections or your track record?  

The best M&A management presentations focus relentlessly on their unique advantage. They demonstrate why it will contribute to the business’s success and how the team will leverage it.

One of our clients, a London-based block chain developer, used this idea to their advantage. Their original pitch had confused what they had done, the market, their technology, their products and the potential of the business. In all, it was unclear what the business did and why investors should be excited. For their management presentation, we helped them identify the red thread and then turn it into a few clear messages that ran through the presentation. The result was a compelling investment story that has taken them to the next level.  

Learn how to create a powerful equity story.

How to create a killer pitch deck

Best management presentation tip #4: don’t be boring.

• Crowded slides?
• Long blocks of text?
• Lists of bullet points?
• Bland headings?
• Weak design?

If your management presentation pitch deck looks as boring as everyone else’s, then investors will not get excited about meeting you. The best management presentation pitch decks are easy to read . They grab interest from the start, avoid jargon and use engaging language. They arouse interest through compelling headlines .

Investors should be able to flick through your management presentation pitch deck and understand your key points just from reading your slide headings. But those headings should also be different and intriguing enough that investors want to find out more. For example, instead of naming one of your slides ‘ About Us’ or ‘Our Team’ , choose a headline that reinforces your key message.

If your business is about running rock festivals, your headline for the team section of your deck could be ‘Ten Years’ Combined Experience of Running Profitable Events’. If you manufacture widgets that draw on your experience working with the inventor of the leading vacuum cleaner, your headline could be ‘James Dyson’s Protégé’. Finally, the best management presentations are often professionally designed with plenty of white space and relevant visuals. Don’t let amateur design let you down.

Best management presentation tip #5: Appeal to the heart as well as the head

Stories are an incredibly effective way to bypass investors’ heads and reach straight for their hearts. Instead of delivering plain facts in your management presentation (which are quickly forgotten), provide them within the context of a story.

• Identify the problem (the ‘villain’ of your story) and then
• Introduce your solution (the ‘hero’ of your story).
• Show what happens after the hero takes action, and
• Lay out the consequences of that action (or the consequences if that action doesn’t happen).

Perhaps your product is a small security device that alerts friends and family when you need help. Your presentation could focus on the software behind the invention. You could talk about how easy it is to set up. You can list the features and benefits. Or you could share what it’s like to feel safe and connected. You could show a video of someone whose life was saved, and how he or she felt when help came running – thanks to your device. That’s what great management presentations feel like.

When you trigger your buyer’s emotions, they become invested in your business and in you. Your management presentation becomes memorable and shareable. Remember: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

Best M&A management presentation tip #6: Be honest

The best management presentations are from senior executives who don’t pretend to be perfect. Teams admit their mistakes, but also what they’ve learnt from them. They don’t hide their strategy changes, but instead share why and how they changed their approach, and the impact this has had. They have the confidence and self-awareness to be honest. As a result, investors see them as being trustworthy and having integrity and credibility.

Investors know there’s no perfect opportunity, there’s no perfect team, there’s no risk-free reward . So they are – rightly – wary of management teams that claim to offer any of these. Equally, if it appears that you’re trying to hide or mislead them, the investor will start to question everything else about you. To avoid this, be explicit about the data backing up your track record and the methodology used for your forecasts. Address doubts in your management presentation instead of creating them.

How to prepare an investor pitch deck

Best management presentation tip #7: show, don’t tell.

In your management presentation, Instead of describing how your product works, embed (or link to) a short film or screen-capture showing how it works. Instead of stating that your product changes people’s lives, include screenshots of customer reviews in which people say they will never be the same again. You could say that your product or service is different, but it’s much more powerful to show it, with mock-ups, testimonials and clippings from your industry’s trade press.  

A few years ago we helped a diamond mining company raise money from investors in London. To back up the powerful pitch deck that we helped them create, for their management presentation we suggested they bring a raw diamond into their meeting. Why? Firstly, few investors will have ever handled a raw diamond. Secondly, it allowed the management team to bring the business to life with stories: How often a diamond of that size was found, How many tons of rock they had to move to find that diamond, At what depth they found it, and What they did about safely and security. This one small prop transformed the quality of their presentation and made it much easier for the team to raise the money they needed to expand the business.

Transform your M&A management presentation

Call us, you’ll get  practical, easy-to-implement advice that will help you to grab investors’ attention , impress them and get you invited in for that vital face-to-face management presentation. we can write your investor pitch deck and help with presentation training ., you’ll benefit from our 15+ years experience transforming management presentations. then, ahead of   the meeting, we help you rehearse the management meeting so that you come across as just the right team to help the investors achieve their investment objectives., we do this every day for scale-ups, quoted companies and private equity firms.  , call louise today on +44 (0)20 7018 0922 or email [email protected] to discuss how we can best help you., transform your presentation skills with tailored coaching.

We can help you present brilliantly. Thousands of people have benefitted from our tailored in-house coaching and advice – and we can help you too .

“I honestly thought it was the most valuable 3 hours I’ve spent with anyone in a long time.” Mick May, CEO, Blue Sky

For 15+ years we’ve been the trusted choice of leading businesses and executives throughout the UK, Europe and the Middle East to improve presentation skills and presentations through coaching, training and expert advice.

Unlock your full potential and take your presentations to the next level with Benjamin Ball Associates.

Speak to Louise on +44 20 7018 0922 or email [email protected] to find out more and discuss transforming your speeches, pitches and presentations.

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Preparing a Confidential Information Memorandum: What You Need to Know

January 17 2023  |  3 Min Read Time

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Mike Rosendahl

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Once you've decided to sell your company—no matter what type, how large, or in which industry sector—presenting it in the best possible light is essential to getting the highest possible price. To provide a detailed depiction of your business and help potential buyers determine whether to pursue an acquisition, your investment banker will prepare a confidential information memorandum (CIM).

Also known as an offering memorandum or an information memorandum, this confidential document is a typical part of the M&A sell-side process and an important tool for buyers to evaluate your business. But what exactly goes into preparing a CIM? And how can an investment bank help you accurately portray your company’s past performance, present standing, and future promise?

What Should You Consider When Preparing a CIM?

A CIM for an M&A deal must effectively communicate the current and potential value of your business. Here are some things to keep in mind as you begin:

• Consider who the document is being prepared for, and tailor the content accordingly. Your CIM should be customized to the specific needs and interests of impending buyers for your particular business.
• Your CIM will contain sensitive information about your business, so maintaining confidentiality throughout its preparation and distribution is vital. To maximize privacy, ensure that proper nondisclosure agreements are in place before sharing the CIM with qualified buyers.
• Your company’s CIM should be concise and easy to understand. Avoid using overly technical language and jargon that may confuse or overwhelm interested parties.

What Information Should Your CIM Include?

The CIM should report the facts and figures that a future owner would want to know—starting with a clear and detailed description of the company, your products/services, your history, and your mission and core values. In addition, your CIM should communicate the following:

• Growth opportunities. How will the company grow in the future? What is necessary to achieve this growth?
• Financial information. Your CIM should provide detailed financial information about the business, such as revenue and profit margins, EBITDA, cash flow, projections for future growth, CapEx, and balance sheets.
• Competitive landscape. Interested parties will appreciate a thorough analysis of your industry as a whole—and the competitive landscape in which your company operates.
• Management team. Take the time to highlight key members of your management team, their experience, and their qualifications. Your top people have contributed to your company’s success—and would-be buyers will want to hear all about it.
• Marketing and sales strategy. What is your company's marketing and sales strategy? Explain your target market, your channels of distribution, and your approach to customer acquisition.
• Risks and challenges. Be transparent in your CIM about the risks and potential challenges that your company faces, including legal and regulatory issues, market trends, and other factors that could impact future performance.
• Other key items. Your CIM should also provide any supporting documents and appendices, such as legal agreements, a description of any patents and other intellectual property your company owns, and any other relevant information that can help potential buyers evaluate the business.

How Can an Investment Banker Help You in Preparing the CIM?

Investment banks play a critical role in preparing a CIM for an upcoming M&A deal, identifying and gathering the key information required to help secure the most advantageous deal for you. Furthermore, your investment banker can work with your management team and financial advisors to compile financial statements, market research reports, and other relevant documents. An experienced investment banker can help you do the following:

• Customize the CIM. An investment banker can personalize your CIM to meet the specific needs and interests of those in the market for a company like yours. By tailoring the document’s content, tone, and messaging, you can boost your company’s appeal to different types of acquirers, including strategic and financial buyers.
• Prepare a market analysis. Your investment banker can thoroughly analyze your particular industry and your closest competition, delivering exclusive insights into market trends, customer behavior, and growth opportunities.
• Handle messaging and positioning. By highlighting your unique strengths and competitive advantages, your investment banker can craft the messaging and positioning to make your company more attractive to interested parties.
• Distribute the CIM. Your investment banker can distribute the CIM to the right potential buyers while also managing your response to inquiries and requests for additional information.
• Achieve the optimal deal. Finally, your investment bank can guide you in selecting the appropriate buyer and negotiating favorable terms for the sale of your business.

The right investment banker can bring a wealth of knowledge and expertise to the preparation of your CIM. Ensuring that this confidential document effectively communicates your company’s value and potential can help you locate the best possible buyer and achieve the best possible deal for your business.

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Investment Banking New York Office

201-444-6280 Ext 1 (direct) [email protected] Connect 201-444-6280 Ext 1 (direct) 407-621-2199 (fax)

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Data & Finance for Work & Life

Management Presentation: 8 Tips, Examples & a Template

In a corporate context, presenting works wonders for a career. Most professionals get exposure to presenting to informed colleagues and department managers. It’s an ideal way to get visibility and show value. But a management presentation to senior executives who aren’t familiar department nuances is a different ballgame.

A management presentation is a high-level summary to senior executive that optimizes reports to include only the details relevant to directorial decisions . They are notoriously difficult to navigate for two reasons: 1. most executives do not have working knowledge of the nuances in each department , 2. presenters rarely have time to understand executives’ preferences .

More than anything else, good management presenters learn how to strike a balance in the degree of detail: they provide enough detail so executives make informed decisions, but not so much detail that they cause confusion.

This article explores how to make a good management presentations in PowerPoint using 4 management presenting best practices , 4 management presenting techniques , providing examples for each, and finishing with a management presentation template you can apply in real life. You can use it as a jumping off point for deeper communication curriculum .

5 management presenting best practices are:

• Ask what managers prefer ahead of time.
• Have 1 message, and 1 message Only.
• The only words should be “Thought Starters.”
• Keep it short.
• Practice 7 times in advance.

4 management presenting techniques are:

• Use a CSP model – Challenge, Solution, Progress.
• Begin with a summary of exactly 3 points.
• Use only these 3 chart types: bar, line, scatter.
• Design slides with the company logo.

I will use a financial analyst perspective in this article, but everything here applies to data and business analysts as well.

Ask Executives Their Preference Ahead of Time

If you’ve ever taken a class on presentation techniques, you’ve heard the old adage “know your audience.” It’s true, the best way to deliver a great presentation is to align your message with what your audience already understands. The same applies to a management presentation.

The challenge is that, more often than not, executives are too busy for you to get to know them well. This means you hardly get the chance to understand how they like presentations. So what can you do? Well, ask them! There’s no harm in sending an email to understand better. And what’s more, once you know, you can always defer to their preferences in the future.

For a financial management presentation, common questions to ask include the following:

• Do you prefer to see raw data, or only visualizations?
• Do you prefer charts or table summaries?
• Would you like a written explanation on paper for each slide?
• Do you like averages alone, or do you prefer means, or standard deviation?
• What interests you most in a presentation?

If you gather some helpful insights, then your presentation will be that much better. That said, you may not get a response, or it may be quick and not insightful. But most senior executives will appreciate you asking .

The best part is you will be able to surprise them. Using the best practices and techniques below, in additional to any insights gathered form your email, will work wonders for you.

Have 1 Message, and 1 Message Only

The easiest mistake to make on a management presentation is trying to deliver multiple messages. Senior executives go through loads of meetings every day, and each meeting they have includes a wave of information. Your mission should be to deliver 1 essential message so they can easily understand and compartmentalize it.

This is no easy task. When I try to narrow down the focus of my management presentation message, it seems like I leave out critical information along the way. The key is to tell a story to incorporate critical information as part of a story towards the essential message.

For example, imagine you work for a wholesale watch company called Batch Watch . You want to explain a financing operation in which the company has the option of two loans to fund the initial costs of 10,000 watches. These loans have different interest rates and maturity dates. Loan A is better if the company expects to sell the watches within 3 months, while Loan B is better if the company expects to sell over more than 3 months. Each has cancellation fees and cash flow impacts.

Instead of showing the cancellation fees and cash flow impact of the each loan, all you need to say is “ we expect the company to sell them within 3 months, and we recommend loan A for that reason.” If the executives disagree on the sale timeline, they will ask for more information.

This is how you keep senior executives engaged, by integrating them in the story you tell. Ultimately, the essential message of your presentation should be how much profit the company will make from the watch funding operation. Senior executives should leave feeling like the project is in good hands with you, and they only feel that way when you tell a story around the essential message .

Whatever the Message, Use Data

Whatever message you want to send, it needs to be backed up by data. In the example above the data was financial, but it’s not always that simple. Context may require you to provide KPIs and perform extensive data analysis that culminates in a small output that your viewers can easily digest.

You need to be strong with data to deliver a good management presentation. To get started or refresh your memory, you can read AnalystAnswers’ free Intro to Data Analysis eBook .

The Only Words Should be “Thought Starters”

As a general presentation principle, you should not write many thoughts down on presentation slides. Words have two negative impacts on the audience: they demand energy from the reader, and they make the reader feel compelled to read, lest they misunderstand.

If you can avoid putting text blocks altogether, do. If you don’t need any writing at all, don’t. However, if you need guidance as you speak or want to provide reminders for a later data, use “Thought Starters.”

Thought starters are phrases of 3 words maximum that contain ideas leading to the essential message. People often call them “bullet points,” which is common for list-style thought starters. Personally, I prefer to place thought starters at different places on a slide. When I use a chart, for example, I put thought starters at relevant places on the slide.

Keep it Short

Your presentation should never consume more than 80% of the allotted timeframe. This means that if you plan a 5 minutes meeting, deliver the presentation in 4 minutes. If you’re given 30 minutes, do it in 25 minutes. If you have 1 hour, do it in 45 minutes.

By keeping the presentation short, you relieve the audience and you allow for some question buffer. Have you ever sat in a meeting planned for 1 hour, and at 45m it ends early? It’s a pleasure for everyone. Most of us feel like we’re running behind — when you put us ahead of schedule, we love you!

At the same time, senior executives may bombard you with questions throughout the presentation. If you planned to fill the whole timeframe, you won’t finish. But if you planned to finish early, you still have a chance.

And if you use the rest of these best practices and techniques, those senior executives shouldn’t need to ask too many questions!

Practice 7 Times in Advance

There’s a mix of opinions on the number of times you should rehearse a presentation before doing it live, but most people agree that it’s somewhere between 5 and 10 times. If you take nothing else from this article, take this. To deliver a good presentation, prepare excellent slides; to deliver a great presentation, practice presenting them 7 times.

To deliver a good presentation, prepare excellent slides; to deliver a great presentation, practice presenting them 7 times. AnalystAnswers.com

But just practicing isn’t enough, there are a few criteria you must meet:

• Practice in the room you will present in. There’s something about envisioning yourself live that really makes a difference. When you practice in a space other that where you’ll present, it’s good. But when you practice in the “live” room, you’re able to sensitize yourself to the environment, which calms nerves so you can focus on the message.
• Have an audience. We all behave differently when there’s stimulus of other people around. Whenever possible, get one or two people to whom you can present. In addition to getting used to having an audience, you’ll also get some feedback.
• Use the same volume of voice. When we’re not “live,” we have a tendency to hold back on our voice. This is detrimental to the presentation because you feel taken off guard by your own voice. Make sure to envision yourself in front of the senior execs when you practice.

Best Practices Recap

We’ve addressed 5 best practices — now let’s turn our attention to 4 specific techniques you can easily implement. And when you do, that work wonders for management presenting.

Use a CSP Model (Challenge, Solution, Progress)

Every presentation needs structure, but it’s easy to forget that we need to guide our audience. A great way to structure management reports is using the CSP model. CSP stands for Challenge, Solution, Progress, and it’s exactly what it sounds like.

You need to explain the challenge or goal, explain what the solution to the challenge is (or how to achieve the goal), and show where you are in the steps to completing that goal.

For example, let’s look at our Batch Watch case. Imagine you need to find funding for a new product launch — $100,000 to be exact. A sample CSP model for this would be a slide that shows:

By using the CSP model, you guide the audience. However, it’s important to note that the CSP model is not a summary . It’s an overview of the process, but a summary should always come before. Let’s talk about it now.

Begin with a Summary of Exactly 3 Points

Any good presentation begins with a summary. And a good summary communicates the essential message simply in 3 points. However, the summary is not the same thing as the CSP model. Instead, it provides an alternative view on the challenge and and solution.

For example, using our Batch Watch case of funding a new product, you could address a summary in the following way:

• Challenge, Solution, Progress
• Funding acquisition
• Project Timeline

This provides additional details that are most relevant to the project and carry added value to the CSP model.

Use only Bar Charts (aka Column Charts), Line Graphs, and Scatter Plots

Whether it’s for data, financial, and business analyst topics , management presentations should only ever have bar charts, line graphs, and scatter plots. They are common, rich in information, and well understood. Any other kind of graph is distracting more than anything else.

A bar graph is useful when you want to compare like variables. For example, if you want to show the average size of Canadian trout versus American trout. A common mistake, though, is to use bar graphs to show change over time. While it’s not incorrect to do so, line graphs are better for this purpose.

A line graph is useful when you want to show change in one variable over time (we call this time series data). For example, if you want to show the progression of revenues over time, line graphs are the perfect way to do so.

A scatter plot is best when you want to compare a set of observations of one variable to a set of observations of another. It’s the ideal way to quickly visualize the relationship between two variables. For example, if you want to see how company revenues compare to GDP, you could use a scatter plot like this:

For example, let’s look at our Batch Watch case. If we want to see how our company is performing compared to the economy as a whole, we could use this scatter plot. As you can see, we have a positive (bottom left to top right) relationship, but a weak one (points not clustered closely).

Design Slides Using the Company Logo

When you’re presenting to senior executives, you want your slides to look professional. The best way to do that is by putting your company logo on them, including any corporate design standards (colors, fonts, etc). Show through your presentation that you belong to the same company, and that you’re in it in spirit. For example, let’s add the AnalystAnswers.com logo to our CSP slide:

Techniques Recap

Here’s a sample management presentation template below. I hope you understand after reading this article that management presentation is more about your delivery than it is about the slides you prepare.

Download Management Presentation Template for Free

While the techniques we’ve discussed will help you build a good presentation, your success really depends on how well you deliver the ideas needed to help senior executives make decisions. At the end of the day, it’s all about balance.

If you only remember two things from this article, remember that great management presenters give enough detail to inform senior executive but not too much that they cause confusion, and great management presenters make sure they do so by practicing 7 times in advance. You’ll have to practice, practice, practice.

About the Author

Noah is the founder & Editor-in-Chief at AnalystAnswers. He is a transatlantic professional and entrepreneur with 5+ years of corporate finance and data analytics experience, as well as 3+ years in consumer financial products and business software. He started AnalystAnswers to provide aspiring professionals with accessible explanations of otherwise dense finance and data concepts. Noah believes everyone can benefit from an analytical mindset in growing digital world. When he's not busy at work, Noah likes to explore new European cities, exercise, and spend time with friends and family.

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What’s a confidential information memorandum (cim) in m&a.

What Is a CIM?

How are cims used, legal disclaimer, lessons for saas, who sends a cim, who receives a cim, are cims ever used in small sales, how long does it take to write a cim, are there cims on acquire.com, who writes a cim, do you need a cim to sell a business.

A confidential information memorandum (CIM) is a document that markets your company to the most engaged and qualified buyers. Much like the luxury property market, the biggest and best acquisition opportunities have seldom been open to the general public. Instead, you’d circulate details to the right people, inviting only the most committed to the negotiating table. 

For years, brokers have used CIMs to advertise high-value companies for sale to small groups of buyers. Today, with platforms like Acquire.com, you can advertise your business to thousands of qualified buyers through one free account, regardless of the size of your company. CIMs and similar documents are, therefore, increasingly common in all but the smallest deals.

Below are the most important facts you need to remember when drafting a CIM and how we can help you draft one quickly and easily if you sell your SaaS on Acquire.com.

CIMs are documents that you, a broker, or another intermediary creates to help sell your business. They are summaries of your operations that include your company:

• Growth potential
• Desired steps for courting buyers

A CIM gives potential buyers a first impression of your business so they can decide whether or not to pursue your company quickly. These documents also help buyers better understand how much you believe your business is worth.

As the name implies, you’d normally distribute a CIM confidentially to a select group of buyers. Usually, a broker or other M&A intermediary creates a CIM based on the information you give them. Then they circulate a list of key data points from the CIM to potential buyers (often called the executive summary). From the initial group of interested buyers, the seller and brokerage create a vetted list that can access the full CIM and may eventually bid for the business.

How Do You Structure a CIM?

CIMs include just about everything to do with your business and should give any potential buyer a clear understanding of what you’re selling. Usually, they are divided into these categories: 

• Executive Summary – at-a-glance information to entice buyers to read further. It will usually cover the most relevant points from the greater CIM
• Business History – the highlights from your business’s past like acquisitions, renovations, marketing, and major pivots
• Investment Considerations – a review of your company’s competitive landscape, operations, business lines, products, and strategies, and how these elements could help the business grow further
• Major cash flows
• Liabilities
• Management – an overview of key employees that will be part of the transaction
• Process Considerations – how you wish to be solicited for a sale. This can include preferred deal terms and periods where you’ll take offers.

Example of a CIM

As all CIMs are confidential, few examples exist without extensive redactions. However, Wallstreetprep.com shares a CIM for a casino chain called American Casino and Entertainment Properties LLC (ACEP) drafted in February of 2007 by New York investment bank, Bear Stearns. 

You can see the full version here . I discuss the highlights below and explain how each section would correspond with the CIMs we create for SaaS businesses on Acquire.com. Each section header corresponds to a section of this CIM.

While this section isn’t included in this sample CIM, at Acquire.com we usually place a legal disclaimer at the beginning of the document. CIMs are not meant to be legally binding and often make subjective claims about the state of the business and future growth options. You don’t want a buyer to argue for revoking the sale because of the CIM.

As sales are sensitive, we also specify here that readers may only contact the founder about details regarding the CIM.

Executive Summary

In this executive summary, American Casino lists its three major properties (two in Las Vegas and one in Laughlin, Nevada). For each location, ACEP includes:

• Recent renovations
• Square footage
• Types of gaming machines in each casino

The executive summary also outlines the finances of each location and the percentage of revenue obtained from slots, rooms, food, retail, beverages, and more.

ACEP’s summary notes lower revenue levels the year before drafting the CIM (2006) due to construction projects at different casinos. This may give some insight into why they were selling – perhaps these updates impacted revenue more than expected.

If you were to create a CIM for selling an online business, your executive summary would also list your revenue-earning properties (say you sell a subscription software and an agency-style service) and give a brief overview of each.

At Acquire.com we usually use the overview section to describe any major peaks and valleys in performance and significant changes in the business and what caused them.

Investment Considerations

The CIM explains the value and market position of each location it owns. This section details the state of the overall casino market in Nevada and in each ACEP casino location.

For each casino location, Bear and Stearns also list ACEP’s:

• Current growth rate
• New renovations and how they will impact future growth
• Total dollars invested
• Competitive landscape

The section ends with a list of senior management, their tenure, and blurbs explaining how their combined experience (apparently over 100 years between them all) has helped the business.

For this section on Acquire.com, our brokers like to list things like:

• Potential new products customers would be willing to buy.
• Changes that would allow the business to handle ten times more customers.
• Types of buyers ideal for growing the business.
• How to best spend investment funds.

Business History and Description

According to the document, ACEP has three sub-holding companies and two of these have about three to four LLCs beneath them. There are no further details regarding each company’s role in the conglomerate.

After the business structure, the business history section describes (for each casino):

• How much it initially cost to open.
• When it was acquired by ACEP.
• The dollar amount ACEP invested.
• Description of its revenue generators (slot floors, restaurants, lounges, and so on).
• Investment opportunities for each location.
• The current business and marketing strategy for each location (target demographics, promotion tactics, communications channels, and more).
• The current competitive landscape (in this case, other casinos near each casino).

It’s worth noting that in places where data is similar between casinos, this CIM more or less repeats itself word-for-word in each section.

Most startups and other tech businesses lack the operating history to justify a dedicated history section. Often, a brief overview of company history in the executive summary suffices for CIMs made on Acquire.com.

We usually use this section to focus on exactly who a SaaS business’s customers are, covering things like:

• What customers care about.
• How many customers you’ve recently lost.
• Geographic area customers live in.
• How the business encourages repeat purchases.
• Average amount paid by customers.

As marketing makes up a huge portion of SaaS operations, we also create a separate section detailing your business’s marketing channels. This includes answers to questions like:

• How is most new business generated?
• Which channels are primarily used? (Social media, email, direct calls, and so on)
• Do you use salespeople/sales reps?
• What marketing have you tried that didn’t work?

Financial Review Management

The financial review section begins by repeating the financials highlighted in the executive summary verbatim. After this, it moves to an in-depth consolidated balance sheet showing the total liabilities for each member casino over the past four years.

This is followed by:

• A four-year income statement breaking down ACES’ EBITDA.
• Cash flows from operating activities (normal cash from the casino).
• Cash flows from investing activities.
• Cash flows from financing activities ( business loans , debt, and so on).

When we create CIMs for SaaS businesses, we usually include a detailed profit and loss statement (P&L) from the past three years of operation. We then add a cumulative profit and loss statement across all years your business operated.

This section details each member of senior management (CEO, CFO, and GMs for each location) with information like:

• When they joined.
• Previous employment.
• Any other organizations they are involved in.
• University(ies) they graduated from and their highest degree obtained along with any other certifications or distinctions.

When we create CIMs at Acquire.com, we create a general overview of the company’s internal structure without naming names. This includes things like:

• Number of employees (W-2s and contractors).
• List of key employee positions along with salaries.
• Whether or not these employees will remain with the company.
• Employee autonomy (can they operate without the CEO?).
• Employee benefits.
• Recruitment process.

Process Considerations

ACEP indicates the deals they’re interested in pursuing. They even indicate an exact time and date for when they may receive an indication of interest (IOI) (they specify no later than 5:00 pm EST on Friday, March 2, 2007).

After receiving IOIs, Bear Stearns says they will notify a limited number of parties (“Invited Parties”) that they can continue to work towards a deal. Invited Parties have the opportunity to conduct additional due diligence, including:

• Access to certain members of the ACES management team.
• Access to a data room containing business and legal information.

The CIM finally signs off with a disclaimer that projections for investment may not turn out exactly as hoped and then leave the contact information for Bear Stearns.

We keep this section very simple, asking you to tell us:

• The type of acquisition you want (100 percent or less).
• Desired deal structure.
• Assets included in the sale (usually things like codebase, IP, and web domain)
• How you plan to transition to new management
• Whether or not you would comply with a non-competition clause .

Traditionally, seller intermediaries like brokers and investment banks draft CIMs after discussing them with a business’s leadership team. On Acquire.com, we’ll make a CIM for you when you sell your SaaS business (making at least $1 million in revenue) through our Managed By Acquire service and send it on to our buyer network.

There are traditionally two steps when receiving a CIM:

• A group of buyers the brokerage selects receives only the executive summary section of the CIM with the business name redacted. If a prospective buyer is interested after reviewing the teaser, they’ll sign a non-disclosure (NDA) or a confidentiality agreement before viewing the rest.
• Buyers who sign an NDA gain full access to the CIM including the company’s name and operational and financial information.

How CIMs Work on Managed By Acquire

If you run a SaaS business making over $1 million in revenue, our Managed By Acquire service helps you court prime buyers from around the world. As part of that process, we create a quick and effective CIM for your business. It’s a simple process where:

• We ask you to give us specific information about your business.
• You send us everything you believe is relevant to your business (no need for an official document or proper grammar).
• We put everything you’ve sent us into an effective CIM.
• We’ll store it in a folder with your financials, operational information, and more, and then send it to potential buyers.

Once we start soliciting buyers for your business, we expect your deal to close in weeks, not months. All it costs is five percent of the sale – up to 80 percent less than most M&A banks and brokerages – payable only when (and if) you close.

Ready to get your SaaS business acquired? Sign up for a seller account and start soliciting buyers in hours.

Official CIMs are rarely used in small sales. However, most for-sale listings on platforms like Acquire.com require a description very similar to an executive summary in a CIM before listing. You’ll likely need to cover all of the basic tenants of a CIM like:

• Company structure
• Future plans and investment concerns

Traditionally, CIMs are lengthy documents anywhere from 50 to 150 pages long, and written by M&A intermediaries like investment banks, entrepreneurs, corporate finance firms, and business brokers. An official CIM can take anywhere from a few days to a few weeks depending on how much information is in there. But that’s changing today.

When you create a CIM for a SaaS sold through our Managed By Acquire service, we create this document for you in a matter of days.

Yes, if you sell a SaaS business with at least $1 million in revenue, you can use our Managed by Acquire service to solicit high-value buyers and we will help you construct a CIM.

If you sell your business through our marketplace, you don’t always need a CIM. However, you will need to provide much of the information frequently provided in a CIM’s executive summary – a sort of “micro-CIM” used to entice buyers.

CIMs are usually created by M&A intermediaries like banks and brokers but they can be created by anyone. Usually, they’re created by an entity connected with many buyers. These entities should know exactly what to write to entice these buyers to buy.

Most businesses aren’t sold with a CIM. That said, many buyers will ask for many of the details included in a CIM’s executive summary before agreeing to buy a business. You may find yourself creating an informal CIM of sorts in most online sales. You’ll likely provide all of the information compiled in a CIM during due diligence too.

The content on this site is not intended to provide legal, financial or M&A advice. It is for information purposes only, and any links provided are for your convenience. Please seek the services of an M&A professional before any M&A transaction. It is not Acquire’s intention to solicit or interfere with any established relationship you may have with any M&A professional.

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Peter Upton

Peter is a copywriter and journalism graduate of Indiana University. He’s spent almost half a decade living and working in China and Vietnam and loves learning and writing about startups and other cultures. When he's not writing about founders he’s learning new languages, petting cats, and practicing BJJ.

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Behind the Confidential Information Memorandum (CIM): Process, Importance, and Best Practices

TABLE OF CONTENTS

If you’re a software CEO looking to sell your business or raise capital, it’s crucial to understand the importance of a confidential information memorandum, or CIM, a critical step in the preparation phase for any liquidity event.

The CIM tells the story of your business: where it came from, what it is today, and what potential it has for the future. It highlights your company’s strengths and opportunities and makes the case, quantitatively and qualitatively, for why the business is an exciting opportunity. Investors and strategic acquirers alike use it to evaluate opportunities and assess their level of interest. In short, the CIM is an essential marketing document that helps position your company and establishes the key themes and opportunities for the business that will guide the rest of the process.

Of course, every business is unique, and the CIM should reflect that. CIM structures vary by sector, product category, and financial profile, among other variables. They are also time-consuming to produce, and properly positioning a business is difficult, especially if you’ve never previously done it. It’s not uncommon, for example, for sellers to think that they can simply repurpose the messaging they use for their customers, not realizing that they need to position themselves specifically for a buyer audience. That’s why having a trusted M&A advisor to guide you through the process is vital for ensuring your company is best positioned to be best received by the buyer community, ultimately leading to a strong outcome.

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To help software CEOs understand a proper CIM structure and purpose, this guide addresses the following questions:

• What is a confidential information memorandum (CIM)?
• Why is a CIM important for selling your software company?
• What are the benefits of creating an engaging CIM?
• What are the best practices for developing a CIM?
• What should be included in a CIM?
• Who receives the CIM, and how will they use it?

Follow along as we dissect exactly what software companies should know about preparing and using a CIM.

What is Included in a Confidential Information Memorandum (CIM)?

Sometimes referred to as an Offering Memorandum (OM) or Information Memorandum (IM), a CIM is created at the beginning of a sell-side M&A process for prospective buyers, containing pertinent information about products, market, customer base (redacted), financials, organization, and growth potential.

In other words, the CIM tells the story of your software company in a way that prospective buyers will relate to. It should provide both a compelling story and comprehensive data, using narrative tactics and qualitative information backed up by quantitative metrics. A CIM can be anywhere from 30 to over 100 slides, depending on the depth and breadth of information included. The time it takes to complete this document depends on the scope of the CIM and the level of detail included.

Some M&A advisors will ask the seller to prepare their own CIM. Others will craft short, relatively superficial CIMs on their clients’ behalf. At SEG, however, we recognize that while you’re the expert on your business, we’re the experts at positioning your business to the buyer community. We work closely with each client to learn the nuances of their business, positioning, segmenting, testing, and defending every detail. Together, we create an in-depth, comprehensive CIM that paints a detailed and accurate picture of your company and helps maximize the potential outcome.

Our CIMs typically take 4–8 weeks to write, as we also include a buyer’s list, financial customer packages, and the like. This timeline strikes some sellers as excessive, but it takes time to do it right—to position your company well, establish a strong narrative, gather data that supports it, and prepare for questions to come from the buyer community. This comprehensive approach often ends up saving time in the long run because it helps ensure that we are completely prepared to go to market. By giving prospective buyers and investors what they need upfront, we can avoid unnecessary requests for information that can slow the process down later.

At SEG, we speak the language of the buyer. Nowhere is this more important than in the CIM — the first touch point many buyers have with your company and the guiding document throughout an M&A process. Learn more about how SEG can help you write a successful CIM here .

“I was really impressed with how SEG helped us analyze our business, understand our business, capture all the data across our business, and help us put the story together in the CIM. They discovered things about the business that I didn’t even know. They discovered strengths about my customer retention that I wasn’t even fully aware of, and they knew how to put the story together the right way.” – John Hinckley , CEO of Modern Message

What a Confidential Information Memorandum is Not

Before we dive too deep into CIM best practices, it’s also important to consider what a CIM is not. Here’s a quick list for reference.

Remember, a CIM is NOT :

• A legally binding agreement
• A document with direct valuation feedback
• A pitchbook

First, a CIM is not a legally binding contract. Rather, the CIM serves as a marketing document with the intent of persuading potential investors to take a closer look at your company. Unlike an LOI or IOI, a CIM does not indicate intent by either party.

It goes without saying that this doesn’t mean the CIM should contain untrue or misleading information just for the sake of looking more attractive to investors. Trust us: it’s easier to explain rough spots now than wait for them to come up during due diligence later on.

Similarly, a CIM should not include any information about valuation . Valuations come into play at a point when buyers are comfortable providing feedback based on what they understand about the business. A CIM is more about educating the buyers and piquing interest than setting a price.

Lastly, CIMs are not pitchbooks. A pitchbook is a shorter document designed to appeal to venture capital investors, who are typically looking for minority positions and are generally more risk-tolerant. Private equity companies, on the other hand, are looking for majority transactions and are more risk-averse. They require much more detailed information about the companies they are seeking to acquire than a pitchbook can provide.

Why is a CIM Important for Selling Your Software Company?

CIMs are an essential step for any software company serious about a merger or acquisition. A good CIM should engage readers with your story as well as accurately and clearly depict your business and growth opportunities.

Without these qualities, you risk wasting both your time and the buyer’s. After all, which would you find more appealing: a company that presents you with a lot of data or a company that presents a compelling narrative strongly supported by data?

Of course, data is essential, and CIMs call for a lot of it — far more than in a regular profit & loss statement, for example. We understand precisely what KPIs to include and, just as importantly, how to provide context for less-than-ideal metrics so that buyers and investors can see the full picture, not just a single data point.

Consider a SaaS company we recently helped sell. Two years before they began working with us, they worked with a well-established investment bank that put together a short, template-based CIM with no value implications or value drivers. When they were unable to get the deal they wanted, they turned to us. We worked with them to craft a more in-depth and thoughtful CIM that presented the company in a unique and intriguing way. In the end, they were able to exit at three times the amount they had been offered previously.

While the CIM wasn’t the only factor, of course, it helped the company stand out and reassured the buyers that they were making a well-informed decision.

The Seller's Benefits in Creating an Engaging CIM

As we mentioned before, a CIM is an opportunity to craft the narrative around your business to potential buyers. An engaging CIM has multiple value-additive benefits for the seller, including:

• Maximizing value : A well-argued CIM shows buyers you have a deep understanding of your business and the opportunities that lie ahead, positioning your company as a valuable investment.
• Generating more interest (i.e., more competition) : A detailed and well-positioned CIM creates more interest with buyers, which in turn creates more competition—and better valuation—during the M&A process.
• Time : A comprehensive CIM gives buyers a clearer picture of the business. This creates an apples-to-apples view of the opportunity to ensure both buyers and sellers are effectively utilizing time as interest develops in the process.
• De-risking : A CIM can serve to make important disclosures early rather than later when a buyer might be more spooked by surprises. By using the CIM to bring up potential problem areas early, you can explain any negatives clearly and concisely and take the opportunity to position your company around them.

Expert-Endorsed Best Practices for Developing a CIM

While writing and developing a CIM isn’t something the seller usually handles on their own, we’ve compiled a list of best practices for sellers to consider as they move forward in any M&A process.

Before building a CIM, it’s crucial to have a firm grasp on what value your business provides, where it has come from, where it is today, and where it can go. M&A is driven by the rearview mirror; before buyers and investors can get excited about the key opportunities propelling your company forward, you must first establish the fundamentals of your business within the CIM. This includes thorough details about whom your business serves, its current strengths and weaknesses, how it is positioned in the industry and against competitors, and near-term and accessible growth opportunities.

As part of the CIM creation process, we work with our clients to evaluate the strengths and weaknesses of every aspect of their business, including their industry, products, competition, and customers, and work with them to position around any weaknesses. Only after all this is laid out should you focus on the future, using a well-planned “growth ahead” portion to help maximize potential value for your business.

Here are some other tips to keep in mind:

• Make it a story – Remember, a CIM is the first narrative you get to craft about your business. Don’t just jot down facts and figures. Take the opportunity to deliver a clear message about what makes your business compelling.
• Make it defensible with data – Data is compelling. Use it to support your story, and don’t say anything that can’t be backed up with hard numbers. Forecasts should be based on both historical trends and industry norms. Don’t worry if you’re not familiar with industry norms; it’s our job to provide that and put your information in context. Above all, ensure that every metric you share is accurate. You don’t want any factual errors!
• Keep each message valuable but concise – Remember, it takes hours to read through a CIM. Focus on what’s important and make every word count by providing value in the shortest terms possible. You’ll have plenty of time to dive into everything else throughout the remainder of the process.
• Be transparent – A CIM is important in generating trust with potential buyers. Don’t risk coming across as disingenuous by leaving out the negatives. Be open and control your narrative by positioning around any weak points.

Key Elements to Incorporate in a CIM

What’s included in the CIM depends on the audience. The audience, or potential buyer, usually falls into one of two categories: strategic or financial, and you may use different positioning tactics for each. (Quick refresher: a strategic buyer typically purchases a company to fill a need. Financial buyers usually seek to build an investment portfolio with high-performing businesses.)

To appeal to the strategic buyer community, for example, a CIM should focus on targeted revenue growth, operational optimization (strategic sourcing, cost reduction in all functions), and reduction in financial cost and investment.

Keep your end audience in mind when writing a CIM. You don’t have time to share everything, so what you choose to share needs to generate the necessary interest from the buyer community.

While every CIM should be unique, there are six elements that should always be included:

Business Overview

• Industry and Competition Overview

Product Overview

Customer overview, growth ahead opportunities, financial overview.

• Ownership and Organization

Read on for more tips about each of these areas, along with breakdowns of key points of each.

Sometimes referred to as the Executive Summary, the business overview is a crucial component of the CIM, providing an overview of its market, value prop, and how it generates revenue.

When writing a CIM, consider including these elements as a business overview:

• Company mission or vision
• Founding story with supporting details
• Information about the leadership team
• Summary of product offerings and roadmap
• Business model and pricing

Industry & Competition Overview

In order for the potential acquirer to make an informed decision, it’s important they know exactly how your company is positioned in your market, the size of your end market, and what market trends are currently impacting the company. This portion of a CIM is all about positioning your business within the broader scope of your industry.

Here are a few items to include in a market overview:

• Industry trends (tailwinds and headwinds)
• Market position
• Competitive analysis
• TAM/SAM/SOM (total addressable market, serviceable addressable market, and serviceable obtainable market)

This topic includes vital information about your business’s product offering and technology. Buyers and investors will want to know about the core product offering and how it differs from others in the market.

This portion should include:

• Product overview (key functionality, what the product does, whom it serves, etc.)
• Product detail (detail on modules, different product offerings, core and supplemental products, etc.)
• Key value prop
• Integrations or APIs
• UI/UX and mobile capabilities
• High-level strategic product roadmap
• Technology architecture

Just as an acquirer wants to ensure your position in the market is solid, they also want to assess your customer base, which is the best support for healthy revenue, especially for subscription-based businesses. This aspect of a CIM demonstrates how your business serves your customers and what it is likely to look like in the future.

Typical items to include in your customer overview include:

• Total customer base snapshot
• Buyer personas
• ICP (ideal customer profile)
• Thorough retention analysis
• Customer segmentation analysis
• Whitespace analysis
• Unit economics
• Customer testimonials and reviews

The CIM is an opportunity to demonstrate that purchasing your company would provide growth opportunities for the acquirer. Once buyers are comfortable with where your business is today based on the prior information, this element can get them excited about its future. You can demonstrate the company’s upward trajectory by showcasing the figures about your sales and marketing efforts.

Some information related to growth that is helpful to include here:

• Sales and marketing opportunities
• Market expansion
• Embedded growth opportunities (whitespace, etc.)
• Product expansion and monetization opportunities
• Potential M&A segments and opportunities of focus, both near and long-term

Painting a portrait of your business as financially stable and scalable is one of the most important parts of a CIM. You’ll share actual financial information and projections and make your company appear as attractive as possible on paper.

Consider providing the following financial information in the financial overview:

• Summary P&L statement
• P&L revenue details
• Thorough COGS (cost of goods sold) analysis
• Thorough operating expenses analysis
• EBITDA / adjusted profitability analysis

Ownership, Organization, and Technology Overview

Finally, it’s critical that software companies provide an overview of their ownership and organization when creating a CIM.

An overview of the organization should include the following:

• Legal corporate structure and ownership
• Organizational chart
• Headcount & compensation trends

Who Receives the CIM and How Does it Impact Their Decision?

Before a CIM is sent, prospective buyers and investors require a non-disclosure agreement (NDA). A CIM contains sensitive information about your business, so be sure not to share private information with other parties.

After a CIM is sent, the prospective buyer/investor will review it thoroughly. Most buyers will skim through a CIM to see if the financials and narrative make sense. Then, they’ll do a deeper read to ensure everything still looks good. Remember that a CIM is intended to be read, not presented, so it should be written to stand on its own. Also, bear in mind that a variety of people, including the CEO, CFO, CTO, and possibly the buyer’s investor committee, will be reading it, so it should speak to multiple personas.

If a potential buyer and investor are interested in learning more, they’ll typically follow up with questions and information requests. Having an advisor to help gauge how to respond to follow-ups and determine what information should be shared at this stage is crucial. If interest remains, additional milestones in the M&A process will follow, including IOIs (indications of interest), LOIs (letters of intent), due diligence, and ultimately going through with the deal.

Your Company’s CIM Roadmap to Optimize Your Exit

In short, the CIM not only tells a concise and compelling story — it gives the data to back it up.

A good CIM provides an accurate depiction of the business for buyers to evaluate, ensures efficient utilization of buyer and seller resources and time, and de-risks the deal prior to the later stages of the process. By following our best practices, you can ensure your CIM is digestible and pertinent while making the audience want more. Doing so helps maximize the potential outcome and ensures a high probability of closing.

Executing a successful CIM is best done with the help of a trusted M&A partner who’s been there before. At Software Equity Group, we have over 30 years of experience telling compelling stories that speak the language of potential PE investors and strategic buyers. If you’d like to learn more about how we can help your business, reach out.

4 Keys to the Perfect Confidential Investment Memorandum (CIM)

Alex Karlsen

February 24, 2020.

Sell-side advisors can sometimes overlook the basics when building a CIM or pitchbook. Here's our take on what matters most after working with hundreds of M&A professionals.

While each company conducting an M&A process is different, most CIMs follow a structure that is expected by professional buyers.  For seasoned sell-side advisors like those that work with Captarget, we thought it would be worthwhile to review what really matters when creating a CIM based on our experience of what works.

Sure, there will be formatting or presentation differences for different advisors.  But the fundamental coverage and information presented follows a consistent structure.  By sticking to this structure and maintaining a simple, professional tone, you will create a CIM (or “pitchbook”) that assists your process instead of impeding it.

For help creating your next CIM, reach out to our 100% on-shore team via our M&A services page here .

1. The Typical Structure Buyers Expect to Find

Professional buyers have come to expect a certain layout and order to the contents of confidential investment memorandums.  In our experience, it’s best to stick to what buyers expect.

Typically, the typical CIM structure consists of a minimum of 17 coverage areas, each explaining a different part of the opportunity, company or transaction.

These are as follows:

-Business overview or executive summary -Strategic considerations specific to the technology, company position etc. -Transactional overview -Company history -Core competencies -Expansion and growth opportunities include market analysis -Sales and customer information -Products and/or services overview -Ownership details, cap table details -Management and employees -Financial information summary -Operations -Facilities -Industry overview -Competition -Trade associations -Financial statements/Financial modeling

These selling documents always start with the presentation of an Executive Summary , which highlights the transaction at hand and summarizes the main selling points and high-level areas of interest needed to orient to the opportunity.

Strategic Consideration Coverage can vary on how the opportunity is being presented and to who.  Strategic buyers may value the company being presented differently than a pure financial buyer, for example.

It is important early on in the presentation process to ensure that the possible buyer understands what drives value for the company, why it is unique and how it is positioned in the context of a competitive marketplace.

The Transactional Overview section is generally a technical summary of the desired transaction.  However, it is important to note that most middle market M&A transactions are considered ‘negotiated transactions’ meaning they are not necessarily bought based on a price tag or set of ridged terms.  That said, the transactional overview is good context to create some shape to a conversation about how a deal can get done, but unlike a public offering or larger deal, these are not typically make or break terms or structures.

From here, the typical CIM turns more to address the operations, structure and trajectory of the business .

The Products and Services section discusses what the business offers to its consumers, whether it's B2C or B2B. Markets and Customers speaks to the type of niche audience the company caters to and its success in doing so.

While these sections may seem basic and self-explanatory, they are integral to beginning to flesh out the “story” of the business in question.  (We’ll talk more about the importance of story, below.)

Next, Operations and Human Resources add to the story about the internal workings of a company and Growth Opportunity outlines the potential successes the company can achieve in the future.

Financial Information is a must because it shows how profitable a business is along with how much debt it carries, which can be a hindrance.

The remainder of the CIM structure is typically dedicated to presentation of industry information and company financials.  This allows for the detailed company information to be presented in the context of the broader market and ultimately should support claims about the trajectory of the business which should then be proven by any financial information presented.  The presentation of financials varies greatly depending on the transaction type and may range from simple historical income statements, balance sheets and cash flow statements to more complicated pro forma business models.

2. A Focus on the Most Important Information (Including Financials)

It is only one of the many focus areas mentioned above, but the most important information included in a CIM is arguably the financials – the data that's going to drive the sale and/or investment.

Ask any professional buyer of businesses or investor what section of a CIM they frequent most and nearly all will say they read the executive summary and the financials.  Only then do they decide to commit significant time to understand the more nuanced elements of the business ownership and operations.  

For years, financials were presented as an Appendix to the story, or even as a supplementary document.  Modern CIMs should present financial information as part of a story line, not as an afterthought.  Attention should be paid to the presentation of financials while still being sure to include working sheets with all non-presentation specific supporting documentation.  

Although financials are often included towards the end of a CIM, know note they the importance of this information is paramount.  After all, most middle market M&A transactions are valued based on EBITDA, net income or something similar instead of growth potential, market conditions etc.

3. Tell a Story

The most important thing that a CIM does is tell a story. Period.

Whether it's a positive or negative story all depends on how well the investment advisor does their research and how well they extrapolate the information. The narrative is created through careful evaluation and consultation with management. Oftentimes, it's written and rewritten until the narrative is absolutely perfect and designed to have maximum impact.

Remember – CIMs are not just presentations of technical information. They are used to tell a story about an opportunity that the buyer didn’t know existed until that moment.  Additionally, CIMs do not need to answer every question a buyer could have.  

Quite the contrary, they should insight a buyer to ask more, well informed questions.  Taking this approach can help ensure that your CIMs are not too technical and not too long.

4. An Honest Look at the Business

The most important thing that a company can do is offer an honest look at the business. Outlining areas of both strength and weakness let investors and buyers know where they need to put the work in, and whether it's doable. While we can all agree that CIMs are selling documents, taking an approach where weaknesses are hidden or the entire story is not told only creates distrust early on in an already technical and often difficult process.

Consider your audience as you tell your client’s story. What do they value most in an opportunity? How do they communicate?  Use this to drive how you present the information without blurring the lines into ‘pitching’ too hard.

How Captarget Makes the Confidential Investment Memorandum (or CIM) Process Easy

Captarget makes the CIM process easy for business owners and M&A professionals looking to sell all or part of their (or their client’s) business by providing the expert staff, tooling and experience needed to present the opportunity in the context of industry best practices.  It is our job to dig through and digest all the information, package it into a professional selling document and provide critical feedback along the way.  

Having access to a team of analysts who have developed a significant volume of CIMs over nearly a decade makes the process better, faster, simpler and less expensive.  

While working with our team, clients no longer have to wonder what or how to say what is needed to communicate with buyers and instead can focus on all the other necessary elements of a business sale.

Explore our services on our M&A Services page .

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When you’re attempting to sell your company to a prospective buyer, or trying to secure financing from potential investors, there are a lot of moving parts that have to be dealt with. Among the many other issues is that of documentation — the various types that are needed to move the transaction along. One of the most important of these is the confidential information memorandum, which is used in virtually every merger and financing situation.

What Is a Confidential Information Memorandum?

A confidential information memorandum (CIM) is a document that is typically used in mergers and acquisitions (M&As). It contains important information about the business that is being acquired or is looking for an investment from prospective investors.

This information is relevant to the transaction, as it includes data that is important to potential buyers or potential investors. In short, a CIM gives a potential buyer detailed insight into the company it is looking to acquire. Other names for a CIM include “offering memorandum” and “information memorandum.”

When and Why Are CIMs Used?

What does the CIM mean? Typically, a CIM is a part of the due-diligence phase on the sell-side M&A process for investment banks or venture capital firms. At the outset of the M&A, information is gathered on the client (the company that is being acquired or sold), which includes company information, its products and services, financials and information on its industry.

Note: In some instances, a “light” version of the CIM often called an executive summary or teaser is produced — usually five to 10 pages — which redacts the identification of the company. This “anonymous” document is simply produced to give a general overview of the company in order to attract interest.

What Does a CIM Contain?

Because a CIM typically includes a large number of pages (in most instances it’s anywhere from 50 to 150 pages), it contains loads of information on the company, its financials, growth opportunities, and its industry overall. The structure and contents of a CIM vary from situation to situation, but in most cases, a CIM contains the following sections:

• Key Investment Highlights
• Products and/or Services
• The Overall Market
• Sales and Marketing
• The Management Team
• Financials (Past Results and Projections)
• Risk Factors

Of course, there are usually more sections, but these are the ones that tend to end up in every CIM. Under these offering memorandum sections are additional information on the company, which includes a thorough overview and history, data on competitors, employees, assets (tangible and intangible), legal and contract data, supplier overview and technological capabilities, among many others. A CIM follows no standard formula; it can be extremely text-heavy or can contain graphs, photographs and even videos in some cases.

On the Sell Side of the Transaction

A CIM is usually prepared by an investment banker, M&A advisory firm or venture capital firm, in conjunction with the target company. The CIM is used as a marketing document, and efforts are made for as many aspects of the company to look attractive to potential buyers or prospective investors. The maxim for the investment banker is “don’t just sell, but sell for the maximum value.”

In most cases, before a prospective buyer gets to see the CIM prepared for the target company, it receives the teaser to gauge interest. If the potential buyer is interested, it then receives the CIM, which obviously includes the company name, the information about the company itself, its financials and management and all the items that are relevant to the sale or investment.

A CIM gives buyers a snapshot of the company — accurate and up to date — to help them decide whether it’s an opportunity worth pursuing. It creates a basis for the overall worth of the company, its value on the market , and whether or not an analyst would be brought in to determine any growth potentials or growth opportunities.

When crafting a CIM as a business owner, it’s best to put yourself into a buyer’s mindset; think of what questions you would ask if you were the one buying a company. Being in this buyer mode will help you think of all the things that need to be brought into the CIM — things that will make the company more attractive, which will lead to a higher selling price or better terms on the investment.

How To Share CIMs

The standard way to share CIMs, along with other documentation related to the acquisition, is in a virtual data room (VDR). A VDR (sometimes referred to as a “deal room”) is a secure, online repository for document storage, editing and distribution. It is generally used during the due-diligence process that occurs in the early phases of a merger or acquisition.

Security Outside of the VDR

Sharing CIMs and other financial documents related to an M&A is a risky proposition; since these documents are a detailed, intimate look behind the curtain of a company, ending up in the wrong hands (a competitor, perhaps) could be trouble. That’s because these types of documents contain a lot of proprietary information — details about financials, intellectual property and other possibly sensitive data — pending lawsuits, employee data and information on competitors, among other details that are not intended for public consumption.

How Caplinked Can Help

Caplinked is a leading provider of VDRs, used and trusted by those in the M&A industry. A Caplinked VDR contains the tools and features required for security during the due-diligence phase. These simple yet secure features include high-level admin controls, document and version control, 24/7 customer service and multiple layers of security. To see how a VDR will help your merger and securely manage your documents during the M&A process, sign up today for a free trial of a VDR solution that will help the due-diligence process flow far smoother .

Chris Capelle is a technology expert, writer and instructor. For over 25 years, he has worked in the publishing, advertising and consumer-products industries.

MelCap Partners – https://melcap.com/sell-side-confidential-information-memorandum-important-document/  

Corporate Finance Institute – https://corporatefinanceinstitute.com/resources/templates/word-templates-transactions/cim-confidential-information-memorandum/  

Wall Street Prep – https://www.wallstreetprep.com/knowledge/confidential-information-memorandum-cim-example-pdf-download/

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Confidential Information Memorandum (CIM)

Key Takeaways About Confidential Information Memorandums:

This guide explains what confidential information memorandums (CIMs) are in mergers and acquisitions and their place in the M&A process. This guide also explains what is typically included and excluded from a CIM. Here are some key takeaways about confidential information memorandums:

• A confidential information memorandum is a confidential document used in M&A transactions that gives the prospective buyer more detailed information about the seller that was previously kept confidential.
• Typically, confidential information memorandums come into play after the prospective buyer has reviewed the seller’s teaser . Here, the next step is usually to sign a non-disclosure agreement, and the CIM is part of what the seller receives in exchange for signing the NDA.
• CIM’s usually contain information about business operations, products or services sold, financial statements, more information about the management team, as well as insights into sales and marketing strategy and industry information.
• A prospective buyer will use the information the CIM provides in order to perform its valuation and assessment of the company for sale.
• CIM's are also sometimes referred to as Offering Memorandums (OM's).

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Confidential information memorandums explained:.

In mergers & acquisitions (M&A) transactions, confidential information memorandums (CIMs) are a type of document that is used to provide potential buyers with key information about a company, including financial data and details on the business’ operations. CIMs are typically created by an investment banker or M&A advisor and sent out to prospective buyers.

CIMs are meant to be highly confidential documents and should not be shared without the permission of the company being sold. The specifics of what information will be included in a CIM can vary depending on the transaction but may include financial data such as income statements, balance sheets and cash flow statements, as well as pertinent business information such as ownership structure and supplier/customer contracts. CIM’s also often give insights into the industry the business operates in as well as into sales and marketing efforts.

The purpose of a CIM is to give prospective buyers all of the necessary details they need in order to make an informed decision on whether or not to pursue an acquisition. As such, it is important for CIMs to provide enough detailed information for potential buyers to evaluate their options before committing to a purchase. As a result, CIMs should contain comprehensive information about the company’s operations and financial standing in order for potential buyers to understand its value proposition and make an informed decision.

The prospective buyer will use information from the CIM in order to value the company and decide on a price range that makes sense to offer for the seller’s business.

Understanding The Role Of Confidential Information Memorandums In The M&A Process:

To understand confidential information memorandums, you need to understand the M&A process . The term M&A process refers to the steps that a seller takes to sell their business or that a buyer takes to acquire another business.

During the M&A process, when a seller is looking to put their business up for sale, they are concerned with confidentiality.

The vast majority of M&A deals involve privately held businesses. These businesses don’t publish detailed financial information that the public can see, like publicly traded companies do.

In order for a prospective buyer to make an informed decision about the business they will be buying, they will need access to information the business owners would not want to become public.

The seller wants to keep the details about how their business operates as well as the fact they are looking to sell a secret—but the buyer wants as much information as possible about the business they are buying.

To understand confidential information memorandums, you first need to understand why confidentiality is important to a seller in the M&A process.

If word were to get out that the founder was looking to sell the business, and that business’ information were to get released to the public, unintentionally, here are some potential negative side effects:

• Key employees could panic and start looking for other jobs.
• Large customer accounts could get nervous about doing business with a different corporation (the buyer) they have no relationship with, and not renew their accounts when contracts are up.
• Customers in general could not approve of the idea of a potential sale. This has harmed businesses in the past, particularly in the fashion industry.
• Local community news could get wind of the potential deal and it could have blowback on the company through the local community—or the blowback could impact the founders’ personal lives.
• Competitors could gain insight into key accounts or how the company operates.
• Insights into R&D efforts could be leaked before the opportunity to monetize that research has been realized (ie. They had the costs to develop, but now their competitors are privy to the results before the company could start to sell their efforts).
• Suppliers could find opportunity to renegotiate contracts or accounts payable terms.

Because of these reasons sellers have to be apprehensive at this stage, the M&A process has evolved to take considerations for the seller’s confidentiality into account.

Here are a few measures commonly taken in M&A transactions to ensure confidentiality for the seller.

Normally, when a business owner wants to put a business up for sale, they will go through an intermediary (usually an investment bank or an M&A firm). These businesses act as intermediaries between the buyer and seller.

When the seller lists their business for sale, they create a one- or two-slide document that gives high-level information about their business that keeps the seller’s identity confidential. This document is called a teaser . The teaser is distributed by the intermediaries to prospective buyers. If those buyers are interested in the seller’s business based on the information they learn from the teaser, they will request more information from the seller. They will need this information in order to value the business and determine what it is worth, as well as to assess the business more qualitatively. This process almost always involves signing a non-disclosure agreement . The confidential information memorandum is what the prospective buyer receives in exchange for signing that NDA.

The information in the CIM is used in their valuation and assessment of the business for sale so that the prospective buyer can determine a price range for an offer that makes sense.

Now that we’ve seen how CIM’s fit into the M&A process and their role in facilitating confidentiality in the deal, we’ll look at what to include in a confidential information memorandum.

What To Include In A Confidential Information Memorandum?

Now that we understand what a confidential information memorandum is and its role in the M&A process, we’ll look at what should be included in a CIM.

Naturally, each business will have unique information it will want to convey to potential buyers. The better the information that a prospective buyer has about your business, the better they will be able to conduct their financial valuation and qualitative assessment of your business. In other words, the more information they have the better an offer they can make. This is true up until a point and the next section will look at what should be excluded from a CIM.

Typically, a CIM is prepared with the help of an investment bank or M&A advisor, so entrepreneurs normally don’t write this document alone. These advisors will have input and guidance into what should be included in the CIM.

However, here are some things that should be included in confidential information memorandums for clarity. Normally, these topics would make up sections in the document.

1.     Business Model – This document should explain how your business model works, what makes it unique, how your offer or value proposition is different than competitors, and give insights into how to scale the business further from here.

2.     List of Products or Services – Use this section to explain what you are selling and explain how this works. This section should include a list of your company’s products or services and it should also break down these products or services by the percentage of revenue they account for. If your business uses suppliers or outsources part of the services it delivers you can also list these suppliers and partners here. This may or may not make sense depending on the nature of your business, the size of the suppliers/contractors, or the degree to which you are concerned about confidentiality. This would be a good conversation to have with the investment bank or the advisor helping you to create your CIM.

3.     Customer Acquisition – This section should explain how your business makes money. How do you acquire new customers? What does it cost to acquire a new customer. What is your return on ad spend (ROAS). If you can, when you are calculating ROAS, use lifetime gross profit per customer. It’s also beneficial to include how much market share your company has. Some strategic buyers look for this specifically. It’s also important to include your recurring revenue and churn rates here. Additionally, buyers will want to determine if your business is channel dependent. Do you get all of your website traffic from Facebook ads? Channel dependency is a big reason why a buyer would decrease their purchase price or structure some compensation in the form of an earnout . You will want to take measures to make sure your business is not channel dependent before you try and sell the company.

4.     Defensibility/Economic Moat – What gives your business a defensible growth position? Does your business have patents or trademarks? Are the costs to grow substantial? Give some thought to what makes your market position defensible and spell it out for the buyer.

5.     Detailed Financials – You should include financial statements for the last three to five years as well as future projections for the next two years. They will need financial information to properly value your business.

6.     Organizational Structure – This section is important to use as a way to show that the business is not dependent on the founders. Here, you should include an overview of your management team that has bios for each team member and shows their compensation. Talk about each managers responsibility over their domain. If your business is personnel heavy, then you could try to show how an acquisition could improve margins or efficiency through cutting jobs or through adding expertise or through implementing professional management practices. Exclude the names and the contact information of each manager. You can list them by their job title and use the bio section to give insights into previous work experience, education, and career growth at your business.

7.     Customer Information – This section is intended to describe your business’ customers. What market do you serve. Give prospective buyers an idea of who your customer avatar is. Do you have enterprise customers? (As a side note, never include the names or contact information for these accounts.) You could use this section to talk about how you intend to expand and how you could reach new customers with a capital investment. Could prospective buyers do more? Could they enter new markets or target new customers through this acquisition?

8.     Industry Overview – This section is supposed to provide prospective buyers with information about the industry you operate in. Is your industry growing or declining? How quickly? You could use this section to talk about what is changing in your industry and how your business intends to capitalize on this.

What To Exclude From A CIM:

Now that we understand the role of a confidential information memorandum in the M&A process and what should be included in a CIM, we will look at what should be excluded from the document.

Why should we exclude anything?

The answer is that we can’t know the true intentions of a business or investment group just because they approach us claiming to be prospective buyers.

When thinking through what should be excluded from a CIM, we need to think about what would jeopardize our business if it were to get out. This concept will pertain to some businesses more than others. As a simple example, if you owned a soft drink company, you wouldn’t want to put your exact recipe formula in the CIM. Potential buyers would be able to see almost everything about your company, except that piece of proprietary information. They shouldn’t see something like that until the wire transfer clears. Certain businesses will have more to be excluded from a CIM than others. These businesses may include businesses making food or drink products, software or technology companies, pharmaceutical companies, and companies with cutting-edge R&D or valuable proprietary information.

Along these lines, a list of things to exclude from a confidential information memorandum would include proprietary algorithms, recipes, formulas, and active ingredients (in pharmaceuticals).

This is not an exhaustive list. The point is to think through what a competitor or a business with an ulterior motive, under the guise of a prospective buyer would get in exchange for signing an NDA. You would want to take into consideration what can’t be “unseen.”

Next Steps After the CIM:

After reviewing the CIM a prospective buyer will use this information to come up with a price range that would make sense to pay for this business. This will be dependent on the nature of the business, what makes it unique, as well as the type of prospective buyer (see Financial Vs Strategic Buyers for more info on this).

After the prospective buyer has this price range, they will typically begin negotiating.

If the seller and the buyer agree on a potential deal, then these negotiations will normally conclude with the prospective buyer drafting a Letter of Intent (LOI) . This LOI serves to crystalize the discussions up until this point, formally summarizing the deal on the table. The letter of intent is a partially-binding document which is for the most part, typically non-binding, except for the fact that it gives the prospective buyer a period of exclusivity with which to conduct their Due Diligence of the business. During the due diligence phase, they will look to vet and verify the information they have received in the confidential information memorandum.

Recommended Resources:

• The M&A Process Explained
• Intro To Mergers & Acquisitions
• Understanding M&A Strategy

Due Diligence: Net Working Capital

What is goodwill in accounting, swot analysis.

Kimberly Advisors is a boutique M&A firm that specializes in pre-transaction exit planning, acts as a sell-side intermediary representing business owners in the sale of their company, and provides real-world, market-based business valuations to prospective sellers.

Copyright © 2024 Kimberly Advisors. All Rights Reserved.

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