This draft executive confidential information memorandum (or e-CIM) is a working document provided to recipients to help inform their decision whether to further explore an investment in a pipeline company that [DESCRIPTION OF BUSINESS]. The pipeline company is referred to herein as the “the Company” or “[PROJECT NAME]”. Should recipients choose to proceed, [INV./FUND MANAGER NAME] and, to the extent they choose to participate, investors, will perform additional due diligence, and [INV./FUND MANAGER NAME] will work with the management of [PROJECT NAME] to update this document accordingly.
DRAFT
Prepared by [INV./FUND MANAGER NAME]
EXECUTIVE INFORMATIONCONFIDENTIALMEMORANDUM
(e-CIM) PROJECT [NAME] COMPANY LOGO
Month - Year
SEAF Gender Equality Scorecard Score: Provide the company’s average overall score and its score by category, linking the completed SEAF GES Calculation Sheet. All figures in USD
Gender Lens Highlights and Opportunities: Indicate which (if any) 2X Criteria the company already meets and describe its potential for meeting other criteria in the future.
Products and Services:
Market Overview and Trends: Macro trends in the company’s market (supply and demand), target market, customer segments; what make this opportunity attractive?
Post-Investment Revenue (base): Year 1 to Year 5.
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Investment Risks: Three to five reasons why we are concerned about this opportunity.
Investment Opportunity: Three to five reasons why we like this opportunity.
Projected IRR (base): IRR and term (years).
Company Background: Brief history/when started; Vision, mission, strategic differentiator, Sector and industry(s).
Social Impact: U.N. SDGs supported; Jobs supported and/or created disaggregated by gender; Impact KPI targets.
Growth Plan: Summary of the five-year growth plan with numbers where possible. Investment Overview: Amount and use.
Brief description of what the company produces or offers the market; include information regarding whether the products and/or services are gender-smart in design and delivery
Management Team: Brief description of the management team or owner and their experience; include gender composition.
Size of Workforce and Profile: Total employees (% F/M), management team (%M/F)
Past Year(s) Financials: Embedded table of past years’ sales, gross profit, net profit with margins and year-over-year growth
INSTRUCTIONSBACKGROUND
● Products and services.
● Organization – organizational structure, key management team members, short bios.
: Completed by SGS CFO and Investment Analyst based on commercial due diligence (secondary and primary research). This section should be two to three pages in length. SECTIONS ● Overview of the market, size and trends.
SECTIONS
MARKET
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: Completed by the Relationship Manager (RM), with support from the SGS CFO and/or Investment Analyst and SGS COO. This section should be three to four pages in length and provide a comprehensive overview of what is known about the company to date.
● Governance – presence of a board, board make up, board meetings.
● Company structure, current owners (gender composition) and profile, percentage ownership. ● Mission, vision and strategy.
● New customer acquisition strategies.
● Marketing 4-Ps analysis (price, packaging, promotions, placement).
Pulled largely from the DSF, site visits, interviews and meetings with suppliers, managers, customers, etc. Written in prose form, a few simple graphics may be used but not excessively (i.e., the e-CIM should not cut and paste from PPT), and a few images to show the factory, assets and products.
INVESTMENT SUMMARY COMPANY
● Description of the company’s target market (within the market), specific segment, customer demographic profile, key customer accounts.
INSTRUCTIONSOVERVIEW
● Brief history of the company; when founded, by whom, motivation.
: Completed by SGS COO and RM. This section should be two to three pages in length. Pulled from the DSF and interviews with the management, and insights from the SGS and IM team.
● Company’s unique comparative advantage to competitors, market share.
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● Porter’s Five-Forces summary analysis. OPERATIONS
: Completed by SGS COO and RM. This section should be two to three pages in length. Pulled from the DSF and interviews with the management, and insights from the SGS and IM team.
SECTIONS
● Company overview: location of factory and sites, main divisions/units, key assets and quality of the assets, production lines.
● Review of main suppliers and source of raw material inputs.
● Distribution analysis. ● SWOT analysis.
GROWTH INSTRUCTIONSPLAN
SECTIONS ● Description of the five-year growth plan. ● Main assumptions begin made that underpin the success of the growth plan materializing. ● Investment being sought.
● Use of funds. ● Table outlining the spend plan (Capex, WC Inv), with high level details of these two categories.
INSTRUCTIONSANALYSIS
● Competitor analysis.
INSTRUCTIONSMITIGATION
SECTIONS ● Risk #1 and mitigation plan. ● Risk #2 and mitigation plan. ● Risk #3 and mitigation plan.
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: Completed by RM with input from SGS and IM. This section should be two to three pages in length outlining the major risk to this investment. Starts high level, but focuses more on the granular, company-level risks. This is the hardest section because it requires the team to have frank discussions about the negative scenarios that could unfold, and to think how best to mitigate those in the event they do occur. The goal is for these risks, and the likelihood and impact of them materializing, to inform the range in the assumptions being used in the financial model. The risks should be linked to, and impact, the assumptions should they materialize.
● Current enterprise value and equity value. ● Amount, type (debt, equity, mezzanine) and structure.
INSTRUCTIONSANALYSIS
: Completed by SGS CFO and Investment Analyst. This section should be three to five pages in length outlining the main financial drivers and assumptions and ranges of those assumptions based on the risks. Inputs from the structure and growth plan are needed for this and must align with the other sections of the e-CIM.
DEAL INSTRUCTIONSTERMS
ACTIVE RISKS AND
: Completed by RM with input from the Legal team. This section can be one page in length outlining the draft terms of the deal (i.e., debt, convertible debt, equity, etc.), the pre- and post-investment capital table, and where the investment vehicle will be domiciled.
● Capital table. FINANCIALS
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SECTIONS
SECTIONS ● Historical performance analysis: A summary of past three years financial performance with analysis of debt, margins, cash flow commentary. ● Main financial drivers.
● [INV./FUND MANAGER NAME]’s initial focus for due diligence and next steps.
: Completed by the RM. This section should be one to two pages in length outlining the main impact metrics with a baseline value (collected during due diligence light) and the estimated targets of those metrics based on the forecasts.
● Timeline to close.
● Assumptions of the drivers used for the model bear (conservative, if risks manifest), base ([INV./FUND MANAGER NAME]), bull (management).
● Estimated recover if risks materialize (protect the downside).
INSTRUCTIONSCONCLUSION
● Key U.N. SDG this deal supports.
● Baseline IRIS+ metrics/KPIs and expected metrics/KPIs post-investment (table).
● Does [INV./FUND MANAGER NAME] recommend this investment?
● A written description of the core social impact metrics we are forecasting (jobs supported and/or created disaggregated by gender, smallholder farmers supported, export revenue, etc.), and any other impact the investment will create.
● Five-year projection of the investment.
● Estimate PBP, IRR for each scenario.
SECTIONS
● Top three reasons why; Top three risks; downside protection if risks materialize.
SOCIAL INSTRUCTIONSIMPACT
: Completed by the RM. Half a page to one page in length summarizing the investment and [INV./FUND MANAGER NAME]’s recommendation about the investment –proceed, wait, stop – with a summary of our reasonings.
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SECTIONS ● SEAF Gender Equality Scorecard “score”.
7 ACTIVE PIPELINE MANAGEMENT TOOL | DISCLAIMER AND NOTICE
MANAGER NAME] DISCLOSURES
NON-REGISTERED SECURITIES
Investmentherein.ingeneral
information memorandum (“e-CIM”) has been made available to the individuals to whom it is provided (“Recipients”) strictly on the understanding that its contents are confidential and must not be copied or otherwise circulated to any other person without written consent from [PROJECT NAME], (the “Company”) and [INV./FUND MANAGER NAME] (“[ALSO KNOWN AS]”).
[INV./FUND MANAGER NAME] (“[also known as]”), which prepared this e-CIM, facilitates direct investments into individual companies. [INV./FUND MANAGER NAME] is not registered as an investment adviser.
ThisCONFIDENTIALITYdraftexecutiveconfidential
This document is a preliminary draft, which is based upon information which the Company and/or [INV./FUND MANAGER NAME] consider to be reliable; however certain numbers and statements are derived from general sources and/or may be unaudited or unverified. Consequently, such numbers or statements may not be accurate or complete. [INV./FUND MANAGER NAME] and/or the Company intends to continue verifying the contents of this draft during the course of due diligence should they and investors agree to pursue the opportunity presented
STATUS OF THIS INFORMATION MEMORANDUM
and in new and small businesses doing business in Ethiopia presents significant risks, including the risk of total loss of amounts invested. Any discussion in the e-CIM of risks facing the Company and investment opportunities in the Company is not intended to be Thisexhaustive.e-CIM is provided to Recipients solely for informational purposes. It does not constitute an offer to sell, or the solicitation of an offer to buy, securities. No representation is made that this document is accurate or complete, nor should it be relied upon as such. The financial projections in this e-CIM are compiled for illustrative purposes only and do not constitute profit forecasts. No representation is made that returns detailed herein will be achieved in the future. Consequently, prospective investors are advised to verify all material facts and to take advice from a professional adviser before entering into any commitments.
The Company anticipates that any securities it may issue in connection with raising capital for the projects described in the e-CIM (“prospective securities”) will not be registered with the U.S. Securities and Exchange Commission (“SEC”) or any other securities commission or division (collectively “Securities Commissions”) and that any such securities will be offered pursuant to an exemption from registration requirements of the U.S. Securities Act of 1933. This e-CIM has not been filed with or reviewed by any Securities Commission. No public or other market or exchange exists for the prospective securities, and it is unlikely that any market will develop in the [INV./FUNDfuture.
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