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Investment Banking University Articles

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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 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

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. 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

After receiving the financials for the target, the investment banker must calculate adjusted EBITDA. EBITDA and Total Owners Benefits (TOB) are proxies for cash flow but not true cash flow of the business as there will be CAPEX and working capital deducted to get to true cash flow. Total Owners Benefit adds back taxes, interest, depreciation and owners benefit. The calculation for EBITDA looks like the following:

It is important for the investment banker to have a strong understanding of fees so that the   In the lower middle market to middle market, fees usually are the following:   6% for <$5M TEV 5% for $5M-$7M TEV 4% for $7M - $10M TEV 3% for >$10M TEV   As you move higher than $2M in EBITDA, the Lehman Scale appears and this is the preferred method for pricing the fee.

After determining one’s coverage and then initiating coverage in the form of index-building, it is important for the investment banker to then begin matching investment mandate’s of strategic and financial buyers to targets within the investment banker’s coverage. The Mandate/Target Matching Methodology is the following:   Build relationships with strategic and financial buyers in a given industry sector or subsector (Use Mergr.com as a database within which to understand investment mandates and contact information) Indicate your

As mentioned earlier, the pitchbook is an origination document meant to win sell side business for the investment bank. There are two main types of pitchbooks that are created.   Introduction & Market Overviews– Introducing the investment bank and giving market updates to potential clients. This is origination work and is associated with then allowing you to pitch different strategic alternatives for the company. Slides showing investment bank structure & coverage Slides showing tombstones of deals that you

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