Why Should You Consider a CIM

Why you should consider having a CIM created for your company even if you are not considering selling it…

In order to answer the question embedded in the title of this blog, it is first necessary to discuss what a CIM is and what its contents are. A Confidential Information Memorandum aka a CIM is a document drafted by a M&A advisory firm like The Clendenin Consulting Group. The CIM is used in a sell-side engagement to market a business to prospective buyers. A CIM, is also referred to as the pitch book, the offering memorandum or simply, the book. It is crucial that all valuable attributes of the business are highlighted in the CIM to get the best terms and highest possible price. It is extremely important to clearly articulate all of the company’s attributes in order to obtain a premium valuation. Note: A CIM is not sent to anyone until they sign a Confidentiality Agreement or Non-Disclosure Agreement (NDA). A CIM will typically contain at least the following:
• Cover page
• Table of contents
• Notice/reminder of confidentiality
• Executive summary
• Corporate information and history
• Detailed description of the business and its operations
• Financial information including analysis of historical results
• Owner/Senior Benefit Worksheet with adjusted EBITDA
• Account breakdown and Customer diversification/Customer base information
• Asset schedules (vehicle list and information)
• Management team information
• Organizational chart
• Marketing information
• Sales process
• Growth opportunities
• Benefit package offered to employees
• IT information and technology employed
• Awards presented to company and recognitions received by company
Having a thorough and professional set of investment marketing materials will have a substantial impact on the success of the M&A process in at least three areas:
• The speed of the process—The more questions that are answered in your CIM, the fewer questions you will have to answer piecemeal to get buyers familiar with the business, its dynamics, position, unique selling propositions/points (USPs), niches, etc., etc.
• The efficiency of the process—The more information you provide to buyers, the more quickly they can determine their true level of interest in the opportunity. You don’t want to waste time bring every potential buyer up to speed individually. A CIM screens out those who are not interested in your industry or business. However, a good CIM will peak the interest of genuine and qualified buyers.
• Overall buyer perception which contributes to their valuation considerations—Buyers are influenced by the appearance of things. Don’t do an injustice to your company by not having a solid CIM.
The purpose of the CIM is to help a buyer understand your business and the unique strategic investment opportunity it presents. Buyers all have an acquisition criteria and the CIM will help them match up your business to that criteria. However, invariably, buyers will have other questions. That is to be expected and that is another step in the acquisition process. The CIM will make it so only potentially interested buyers are calling with more questions. Those follow up questions will be more focused on things like valuation, desired deal structure, etc. and not so many basic questions about your company.
So, that is a little bit about a CIM. Now, back to the original question, should I have a CIM even if I’m not considering selling? You may not be considering selling but there are other important reasons to have a M&A Advisory company create a CIM for your business. The exercise of working with The Clendenin Consulting Group in creating a CIM helps business owners identify opportunities for improvement, uncover issues within the company that can be corrected, have a useful tool when approaching lenders and even used in emergency situations if capital needs to be raised quickly. During the process, The Clendenin Consulting Group will also provide you with profit and loss analysis and advice on all the major business disciplines within your company.
Don’t go it alone. The benefits of having a M&A advisory company create your CIM far outweigh the costs of having it done. The CIM should reflect your company properly and all the years of hard work you have put into it.
I have been in the lawn and pest control business for 40 years as an owner and senior executive level officer and director. I built a company that was number 14 on the PCT Top 100 list when I sold it. I get it. I also have taken the lead role in over $100,000,000 worth of transactions in our industry on both the buy side and the sell side. I also have a heart for those in our business who work so hard and often from sun-up to sun-down. It would be my pleasure to work with you. We, at The Clendenin Consulting Group, have put together a great team and have strategic alliances with some of the brightest in this business. Take a look at our website, my bio on it and testimonials from those whom I have had the pleasure to work with.
-Greg Clendenin