The Executive Summary section takes time and energy because you need to think about how to position the company to potential buyers. Hi Brian. Those are the main ones. It is a limited pages professional document that is used to introduce an acquisition or investment. Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews. You find many commercial banks in your town operating as local businesses. I've been told that CIM refers to word docs, as they are text based, whereas CIP refers to PowerPoint decks, as they're presentations. mezzanine. (Video) How it started, where it's going: 20 years of NERC CIP. Sign up to receive our monthly e-newsletter, plus periodic news, reports, and invitations from Capstone Partners. So if your firm focuses on roll-ups, then perhaps this deal would look more compelling. Just our own estimate based on average multiples in the sector. 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. Does it depend on the industry? The packet of information gives buyers information about the business, management and financials, and the market. Great article again, learning lots of stuff reading M&I as a student and still now as an analyst! Middle-market investment banks serve clients with assets between $5 million and $500 million. If after opting in you would like to opt out, please see the link in the footer. I would reject the company at this point. The Firm's most common investment types include growth capital (34%) and secondary buyout (28%). If you make it to this step, you might spend anywhere from one hour to several hours reading those sections of the CIM. Possimus nihil occaecati quo ad voluptas veniam voluptatibus. Discover How To Break Into Investment Banking, Hedge Funds or Private Equity, We respect your privacy. 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. 31 C.F.R. Structured Query Language (SQL) is a specialized programming language designed for interacting with a database. Excel Fundamentals - Formulas for Finance, Certified Banking & Credit Analyst (CBCA), Business Intelligence & Data Analyst (BIDA), Financial Planning & Wealth Management Professional (FPWM), Commercial Real Estate Finance Specialization, Environmental, Social & Governance Specialization, how to ace an investment banking interview, courses on financial modeling and valuation, full list of the top 100 investment banks here, Head, Vice Chair, or another special title. Sell-Side Pitch Books for Sell-Side Mandates. Typically, investment bankers are known for working strenuous schedules and spend more than 60-70 hours per week. Thanks, glad to hear it! What Is Business Banking? Investment banks include consultants, banking analysts, capital market analysts, research associates, trading specialists, and many others. 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 didnt add the remaining FCF of $8.5 million in calculation of the ending equity value. 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. The profit earned by the investment banks is the fees charged in different services. A CIM is a confidential information memorandum is a document that investment banks prepare with companies in a sell-side M&A process. For instance, an investment bank might help a company issue stocks in an initial public offering (IPO) and assist it during the IPO process. With Rodem-recommended equipment, COP can be more cost-effective than manual washing, while cleaning as effectively - though not as quickly or efficiently - as CIP systems. If you do that, youll 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. Pitch Book Presentation, Part 2: Providing Background and Context. For instance, violations of Bank Security Act (BSA) regulations, which include CIP compliance, may lead to a fine of $250,000 or five years imprisonment. The procedures must describe when the bank will use documents, non-documentary methods, or a combination of both (31 CFR 1020.220 (a) (2) (ii)). The investment banking divisionof a bank provides only the underwriting and M&A advisory services. HAS BEEN ADVISED BY CAPSTONE PARTNERS ON A DEBT FINANCING. Founders and their bankers should discuss how to approach each potential buyer to take into account preexisting relationships, competitive sensitivities, and custom nuances to each party. CIM Banque has a total of more than 10,000 users. Creating a thoughtful, well-organized, and detailed CIM is a critical element of a successful sell-side effort. The CFA institute organizes CFA. Being a former banker and a recent PE joinee, this hits bang on the spot. Buyers will always do their due diligence and confirm or refute everything in the CIM before acquiring the company. Thanks so much Brian. Commercial banks are used to make deposits or finance an auto loan. The Chartered Investment Manager (CIM) designation is the industry standard for discretionary investment and portfolio management services. 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. Receive email updates with our proprietary data, reports, and insights as theyre published for the industries that matter to you most. While most of the terms of the agreement should be tied up by now, your banker will assist you in conducting final negotiations with the buyer to incrementally maximize your value in the transaction. KYC vs. CIP vs. CDD. Occaecati sit incidunt et suscipit. There are high switching costs, network effects, or other moat factors that make the companys business defensible. At Vista Point, weve found the optimal transaction process for maximizing valuation and optimizing key terms takes somewhere around 4-6 months. PowerPoint Hacks for Investment Banking and Consulting Investment bankers and consultants spend countless hours in PowerPoint and efficiency means the difference between leaving early and pulling all-nighters View Full PowerPoint Online Course Table of Contents 5 Keys You'll Need to Master to Become a PowerPoint Guru: Yes, youre right that CIMs in Word format are more common in the US. A trusted M&A advisor with industry experience can be a significant asset and can help streamline the CIM writing process. It is important to note that there are many smaller firms, often called mid-market banks, and boutique investment banks that make up a very large part of the market. The U.S. Investment banks provide services to large corporations and institutional investors. Simply put, a CIM is a comprehensive presentation that serves as a marketing document during an M&A process. In addition, youll want to check out our example of real interview questions from an investment bank. Thanks! GBC's Investment Unit provides information to clients on portfolio management services including CIP procedures and requirements. Then the bank lists the industrys attractive growth rates, the companys blue-chip customers (even lower risk), and its growth opportunities, all in pursuit of the five points above. To detail key performance indicators (KPIs) such as an adjusted EBITDA that the business is measured against. Great post as always Brian! Two Methods of Verification. And then you realize it doesnt matter since no one reads it anyway. An example might be a Home Trust Bank in North Carolina or a Deerwood Bank in Minnesota. Below is a short video that explains how the capital markets function and who the key players are. Hi Warren, feel free to touch base with me at MidCap Advisors. A regional boutique investment bank is the smallest of the investment banks. Once a buyer expresses interest, the banker sends over a non-disclosure agreement (NDA) for the buyer, prohibiting the buyer from disclosing the identity of the selling company and the information contained in the CIP. Though a company's financials aren't expected to be 100% GAAP, all revenue and expenses should be easily auditable back to original sources. With a long track record of success, we are dedicated to delivering results that maximize value for clients. Please look for them carefully. Examples you might be familiar with are Goldman Sachs, Morgan Stanley, Credit Suisse, and Deutsche Bank. If institutions fail to comply with CIP requirements, they may be subject to severe federal penalties. The Role of Commercial Banks in the Economy, How Wells Fargo Became One of America's Biggest Banks. The critical difference between the two types of banks is who they provide services to. Commercial banks can also operate on a larger scale, such as Citibank and Bank of America. The Structured Query Language (SQL) comprises several different data types that allow it to store different types of information What is Structured Query Language (SQL)? 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. Unless the company has a dedicated corporate development (internal M&A) team (companies with an enterprise value of over $25 billion), their internal model is unlikely to be useable and must be reconstructed . 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? By Year 5, it will have repaid $10-15 million of that debt with its cumulative FCF generation. To help management prepare, the banker will schedule a practice session in which the banker will ask common questions and ensure the presentation is consistent with the CIP and other discussions with buyers. The bank's CIP may include procedures specifying when a bank will rely on the performance by another financial institution (including an affiliate) of any procedures of the bank's CIP with respect to any customer of the bank that is opening, or has opened, an account or has established a similar formal banking or business relationship with . The Bank Secrecy Act of 1970 officially stated that financial institutions must maintain an internal CIP to aid the government in stopping money laundering. 4. You may do additional research on the industry and the companys competitors, but youll get much of this information from your client; if youre working at a large bank, you can also ask someone to pull up IDC or Gartner reports. Also when you mentioned watch how closely FCF tracks with EBITDA what do you mean by that? Also is there any video/article on competitive benchmarking, trading & transaction comps and market sizing. Ideally these meetings will be on-site at the selling companys headquarters. PowerPoint-formatted CIMs do likely take up a greater percentage of the total, though. 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. You start by sending the Teaser to potential buyers; if someone expresses interest, youll have the firm sign an NDA, and then youll send more detailed information about your client, including the CIM.