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Part VI

Screen

Ten minutes with a CIM is a decision, not a reading assignment. The quick screen, the canonical red flag library, rubric scoring, screening a target with no financials at all, and reading a sell-side document for what it is.

All parts5 modules, 6 lessons
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M6.1

The Fifteen-Minute Quick Screen

  1. L6.1.1

    Six Checkpoints, Three Kill Switches

    Buy-box fit, trajectory and customer concentration are the kill switches; owner role, add-back smell and asking-price sanity follow. Each screen ends in a verdict: pursue, investigate, or pass.

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M6.2

The Canonical Red Flag Library

  1. L6.2.1

    The Twelve Flags

    The reconciled library: concentration, litigation, regulatory and environmental exposure, owner dependency, working-capital manipulation, lease and cost cliffs, key-employee risk, deferred capex, revenue and margin erosion, related-party dealings, aggressive add-backs, and channel dependency. Each with what it looks like in the financials, the exact seller question, and the decision rule.

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M6.3

Scoring and Hard Gates

  1. L6.3.1

    Rubric the Pipeline

    Apply the scoring rubric in two passes, first on public data and again once the CIM arrives, so only targets above the threshold advance toward a letter of intent.

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M6.4

Screening With Zero Financials

  1. L6.4.1

    The Public-Data Screen

    A full go or no-go decision on a business that has shared no financials: a bottoms-up revenue and earnings estimate, benchmark multiples, a SWOT, and red flags pulled from public records. Also the discipline of saying no to an off-thesis deal you could win.

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M6.5

CIM Literacy

  1. L6.5.1

    SDE Dressed as EBITDA

    The most common CIM trick: owner and family compensation added back in full and labeled adjusted EBITDA. A real buyer must replace those people, and transferable earnings can be a fraction of the headline.

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  2. L6.5.2

    The Three Moves of a Sell-Side CIM

    Narrow your objection to a strawman and knock it down, sell the engine rather than the contracts, and re-label the earnings. Read a CIM as an engineered document with a target, and the target is you.

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