A key component of the mergers and acquisitions (M&A) process is the seller’s offering document – also known as a deal book, confidential information memorandum (CIM) or information package. Successfully executed, this document gives potential buyers a clear picture of a company’s unique value proposition, history and propensity for growth.
Reputable investment banking firms help sellers of middle-market companies develop a professionally prepared document that not only presents the facts but also highlights compelling company features that excite buyers.
At Allegiance Capital Corporation, our investment bankers take a unique approach to preparing CIMs for our clients. We see CIMs as the key marketing tool in the deal making process. Our No. 1 objective is to get buyers excited about the business by revealing the specific opportunities a purchase or partnership could bring to the table.
In order to build excitement about a company, the CIM needs to answer several key questions that will elevate the buyer’s interest.
Buyers want to know: “What’s in it for me?” At Allegiance Capital Corporation, our deal books show buyers exactly why they should buy or invest in our client’s businesses. For a CIM to peak a buyer’s interest, it should clearly illustrate the company’s strengths and how these strengths can create exciting opportunities for the buyer. We offer scenarios that help buyers visualize how and why this deal makes sense for them and their bottom line.
Buyers want to know: “What is the company’s motivation for selling and why should I care?” There are a number of reasons entrepreneurs sell their companies, and you can expect buyers to be skeptical at first. Buyers need to know why you are selling to determine if the deal makes sense for them. That’s why we tie the seller’s motivation into an opportunity for the buyer when we create a CIM. Which leads us to …
Buyers want to know: “What opportunities exist for growth?” For example, a company may need to expand its capacity to keep up with the market, but they don’t have the $12 million they need for a new plant (i.e., their motivation to sell). This is a great opportunity for buyers who want to invest in a business that is ripe for growth, but lacks the money to do so. In this scenario, the CIM could be written to appeal to buyers interested in being a financial partner, by illustrating how the industry, market and company offer high growth potential, and a cash infusion can take it to the next level.
Buyers want to know: “What competitive advantage does buying this company offer?” They need to know how your company stacks up in the market, and you need to show them the competitive edge they could gain by investing in a company like yours. An effective CIM identifies the key characteristics that both buyer and seller bring to the table and explains how a profitable business marriage could result, should the two come together.
Buyers want to know: “How do the business’s financials look?” Understandably, they want to get a clear financial picture of historical, present day and projected financials. At Allegiance Capital Corporation we can help you paint a clear picture for the buyer, so they can see how the business can reap profits under their wings.
Call Us for Advice
Our knowledgeable investment bankers know how to market companies like yours, and we have connections to an extensive list of buyers worldwide. We know what buyers are looking for in today’s market and can help you assemble a CIM that will excite buyers and position your company for sale.
The team at Allegiance Capital Corporation is here to help. To speak with one of our investment bankers, call us today at (214) 217-7750.
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Keywords: selling your business; mergers and acquisitions; investment banking firms; middle market companies; sell your company; entrepreneurs