I absolutely hate writing CIMs. Do you still need to write these as an analyst at a larger, more established firm?
Hi everyone,
I'm currently working at a boutique that is focused on the LMM. As I only recently decided to switch into finance, I interned for a month at another small LMM boutique before switching to the one I'm currently FT. I just finished my first month. I'm not sure if this is an issue that is specific to LMM companies, but I've been asked to write full CIMs at both of these firms and I've had a hard time with both of them for a couple of reasons:
- I don't believe in the companies. There are typically aspects of the companies that sound extremely bad
- The materials they send usually have horrible grammar
- The materials are usually full of marketing words that exaggerate parts of of the company without going into the details of the company. For example, in response to the questions that I sent them, the company that I'm currently writing the CIM on sends me 10 audio recordings of them speaking about random things about the industry without answering my questions.
I would like to know if analysts even need to write CIMs at larger firms. If they do, is it a more straightforward process because the more established companies in the MM+ have better materials that you can use to learn and write about the companies? So far for me, this has been the absolute worst part of IB.
Take the info you have- but that's not enough. Create a list of follow up questions- what you've been given is just the preface to writing something up- the jumping off board. Ask a couple of broad general questions as a follow up and get on the phone with the CFO or let your senior guy ask the questions but include you in the call. That should help answer your questions about the company or clear up with information that is making you "not believe" in the company.
You don't just throw whatever the company gives you into a deck and call it a CIM lol. It's a selling document. Your banker needs to give you an outline with 5 or so salient "investment highlights" to hit. Those come from the raw data and wall of information that your client shares. This is part of being a sell-side advisor, advising the company as to how to position themselves best for a sale.
Writing CIMs is a major part (if not the main part) of being an Analyst, no matter where you are.
Work at a bank with dedicated product groups and you don't have to work on CIMs. Group I was in was dedicated entirely to modeling and execution of live transactions. Coverage teams did all the CIMs, comp spreading, and relationship management.
Which group were you in?
M&A
Be curious for the PE bros, how much do people even read a CIM? I'm convinced 90% read investment highlights and look at financials then blast due diligence questions about whether that info is in the CIM or not
I work for a strategic buyer and we rely heavily on CIMs for the first round and internal socialization. We would repackage it but much info comes from it.
Heard from a friend who’s an associate at a good UMM fund that they spent 1 hr on the CIM before deciding how to proceed. If they’re not into it it’s in the garbage. If they like it they’ll start to model off CIM financials, ask follow up questions, etc
What a cliffhanger
Not in PE but in Corp Dev I can assure you I read every CIM 2-3x cover to cover. Usually when we pitch the acquisition opportunity to our C Suite many of the questions answered are covered in the CIM. If they are not, we likely already have them on a list to ask the bankers. Can't speak to PE of course but I would assume most Associates are responsible for fully digesting the CIM and being able to answer questions confidently from their VP or MD on if certain things were discussed within the CIM.
The prevailing assumption when I was doing PE was that most of the CIM was fluffy bullshit, but understanding the make-up of the management team, customer concentration, and financials is key. It's an incredibly important document, but the more artsy shit you put in there, the more skeptical PE buyers are going to be, and the more likely it's going to be a pass.
On the consulting side, we will look at CIMs when we do our CDDs. With an appropriate haircut for the sell side doing sell side BS, of course. But the CIMs are important when it comes to delivering an opinion on an asset.
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