Looking for a resource on things to consider in a CIM.

June 06, 2024

by a searcher from New York University - Leonard N. Stern School of Business in New York, NY, USA

Looking for high level details on what to look for when reviewing a CIM. Thank you so much for your help.

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Reply by a searcher
from Biola University in North Tustin, CA, USA

^redacted‌ nailed it so not much to add. I have reviewed a lot of CIMs and there are a lot of ways brokers try to spruce them up (like using trailing twelve months that can hide seasonality) so really have to dig in and make a list of items that just don’t make sense or are inconsistent. Many of the sub $500K SDE businesses tend to be lifestyle businesses meaning they run a bunch of personal expenses through the company and then try to add back to SDE (don’t hate the player, hate the game, I guess) so need to scrutinize all add backs. I’ve also found that many brokers are keen on answering a bunch of questions without at least an indication of interest (IOI), so you may want to be prepared with one ahead of time. Other than that, just use some common sense and maybe compare to other CIMs from businesses in similar space to get a feel if maybe common to that industry. Best of luck.

Reply by a searcher
from Southwestern University in Houston, TX, USA

Once you have seen a whole bunch of CIMs, I find it instructive to see what's *not* on the CIM. Did the financials end in 2023? Or is there only a TTM? Do they not talk about the business as much as they talk about what it could do at some point in the future? No discussion of what the company actually does to make a profit?

Usually, what is missing is where to start looking.

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