Packaging

Why Packaging?

After underwriting the financial product (ex. M&A), we can move forward with packaging in the form of various marketing material including a teaser and Confidential Information Memorandum (CIM).

After finding adjusted EBITDA and determining valuation, the investment banker can build the marketing material for the target company which includes a teaser and a CIM. The teaser is a summary of the client’s key selling points.

Packaging Process

Teaser Creation

Confidential Information Memorandum (CIM)

Teaser

After creating the teaser, the investment banker goes into greater detail in a marketing document called a CIM. This document is distributed to buyers after the teaser and is for the serious buyers to do an in depth analysis of the target.

Building the Teaser

The teaser is a summary of the client’s key selling points. The teaser can be broken down in the following manner along selling points including:

Overall financial profile: three years of historical revenue and EBIT/EBITDA and at least two years of projected revenue and EBIT/EBITDA

Indicate type of transaction

Indicate sustainable growth potential based upon competitive advantage:

Customer entrenchment and high switching costs

Long term contracts

Brand recognition

Intellectual property

Stable management teams

Culture

Confidential Information Memorandum (CIM)

The CIM is the primary marketing document associated with sell side M&A. The document is filled with information on the target company including products/services, financials and markets. The teaser comes before the CIM and the NDA must be signed in order to get the CIM.

Building the CIM (Confidential Information Memorandum)

After creating the teaser, the investment banker goes into greater detail in a marketing document called a CIM. This document is distributed to buyers after the teaser and is for the serious buyers to do an in depth analysis of the target.

The typical breakdown of a CIM goes along the following lines:

1) Overview and Key Investment Highlights

2) Products and Services

3) Market

4) Sales & Marketing

5) Management Team

6) Financial Results and Projections

7) Appendices

As an investment banker, you are going to want to demonstrate the following:

Future prospects are growth oriented

Opportunity for operational improvements

Now is the ideal time

Annual growth rate strong

EBITDA margins good

Relatively low CAPEX and WC

Strong FCF

Leadership in market/sub-market

Growth in market size

Defensible business model

Experienced management

Nature of the revenue:

● Diverse customer base

● Recurring

Long term agreements