FINAL CONFIDENTIALMEMORANDUMINFORMATION(FINALCIM) COMPANY LOGO HERE Prepared by [INV./FUND MANAGER NAME] MONTH YEAR
DUE DILIGENCE TOOL | 2 DISCLAIMER
This Final Confidential Information Memorandum (Final CIM) document has been made available to the individuals to whom it is addressed strictly on the understanding that its contents are confidential and must not be copied or otherwise circulated to any person. This document is based upon information which [INV./FUND MANAGER NAME] considers reliable; however certain numbers are derived from general sources and/or may be unaudited or unverified and therefore such numbers may not be accurate or complete. In addition, certain assumptions may have been made in the calculations and analysis in this document which have resulted in returns detailed herein. Investment in new and small businesses carries high risks as well as the possibility of high rewards. As such this document (including, in particular, values or future value of any property or other assets) must not be relied on for the purposes of any investment decision.
As this CIM plan is strictly for information only and does not constitute a prospectus or an invitation to subscribe for shares and no representation is made that it is accurate or complete and nor should be relied upon as such. The financial projections in this business plan are compiled for illustrative purposes only and do not constitute profit forecasts. Therefore, 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.
DUE DILIGENCE TOOL | 3 TABLE OF CONTENTS TABLE OF CONTENTS 3 EXECUTIVE SUMMARY 6 COMPANY BACKGROUND...........................................................................................................................................7 BACKGROUND 7 Products and Services 7 Organization Structure 7 Past and Current Financial Analysis 7 MARKET OVERVIEW.....................................................................................................................................................7 Market Overview 7 Industry Overview 8 OPERATIONS ANALYSIS..............................................................................................................................................8 Operations Overview 8 Supply Chain 8 Marketing, Sales and Distribution 8 SWOT Analysis 8 GROWTH PLAN.............................................................................................................................................................8 Five-Year Growth Plan 8 Investment Plan 9 Procurement Plan 9 First 180-Days Project Plan Narrative 9 RISK ANALYSIS & MITIGATION 9 Risk 1 & Mitigation Plan 9 Risk 2 & Mitigation Plan 10 Risk 3 & Mitigation Plan.............................................................................................................................................10 DEAL TERMS 10 Enterprise Valuation 10 Final Terms and Structure 10 FINANCIAL ANALYSIS 10 Historical Performance Analysis 10 Financial Drivers 10 Financial Forecast 11 BEAR CASE 11 BASE CASE 11 BULL CASE 11 INVESTMENT SENSITIVITY ANALYSIS 11 SOCIAL IMPACT 12 U.N. SDG Supported.................................................................................................................................................12 Impact Improvement Plan 12 FORMAL DUE DILIGENCE FINDINGS 12
DUE DILIGENCE TOOL | 4 Each Section (Financial, Tax, Admin, Legal) 12 Revisions Based on Due Diligence 12 CONCLUSION 13 REFERENCES..............................................................................................................................................................14
Social Impact: U.N. SDGs supported; Jobs supported and/or created disaggregated by gender; Impact KPI targets.
DUE DILIGENCE TOOL | 5 TABLE 1: DEAL SNAPSHOT PROJECT NAME
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.
Market Overview and Trends: Macro trends in the company’s market (supply and demand), target market, customer segments; what make this opportunity attractive?
Company Background: Brief history/when started; Vision, mission, strategic differentiator, Sector and industry(s).
Products and Services: 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.
Past Year(s) Financials: Embedded table of past years’ sales, gross profit, net profit with margins and year-over-year growth
Growth Plan: Summary of the five-year growth plan with numbers where possible. Investment Overview: Amount and use. Investment Opportunity: Three to five reasons why we like this opportunity.
Size of Workforce and Profile: Total employees (% F/M), management team (%M/F)
Post-Investment Revenue (base): Year 1 to Year 5. Projected IRR (base): IRR and term (years).
SEAF Gender Equality Scorecard Provide the company’s average overall score and its score
Investment Risks: Three to five reasons why we are concerned about this opportunity.
DUE DILIGENCE TOOL | 6 Score: by category, linking the completed SEAF GES Calculation Sheet All figures in USD EXECUTIVE SUMMARY Note to Analyst: This section should be one page and include the company name, what it does, about the management team, their recent financial performance and an overview of the investment they are seeking. Company overview. Market potential. Major risks. Financial projections. .
INSTRUCTIONS: Builds on the corresponding e-CIM section but has more detail about the market, competitors and the position the company has in the market (i.e., brand strength). Should be three to four pages in length. OVERVIEW
COMPANY BACKGROUND
PRODUCTS
● Company structure, current owners (gender composition) and profile, percentage ownership. Mission, vision and strategy AND SERVICES Products, services, pricing strategy. Current customers.
Prior year profit margins (past two to three years, if possible), and trend analysis
MARKET
● Brief history of the company; when founded, by whom, motivation
●
Prior year sales (past two to three years, if possible), and trend analysis.
DEMAND ANALYSIS SUPPLY ANALYSIS
● Company organization structure – key management team members and short bios. AND CURRENT FINANCIAL ANALYSIS
STRUCTURE
●
ORGANIZATION
MARKET OVERVIEW
PAST
BACKGROUND
● Governance – presence of a board, board make up, board meetings.
DUE DILIGENCE TOOL | 7
INSTRUCTIONS: Builds on the corresponding e-CIM section but adds more content about the management team’s gaps. Should be four to five pages in length.
●
Enhanced First 180-Day Project Plan checklists should be added either in the document or in the annex (see Stage 5: Value Creation of the AM Unit SOP). When reading the First 180-Days Project Plan, it should be clear to readers what the SGS team will be doing, it should link to
INSTRUCTIONS: Builds on the corresponding e-CIM section but with more attention on the procurement plan, and the First 180-Day Project Plan. At this stage, the SGS team should have vetted and interviewed the suppliers of key equipment and decided on which supplier will be used. Reasons for this decision should be presented in this section. The SGS team should also have a very clear idea of what they will be doing for the first six months of the company.
COMPETITOR
DUE DILIGENCE TOOL | 8
PORTER’S 5 FORCES ANALYSIS Note to Analyst: Include statistics / tables.
OPERATIONS OVERVIEW
OPERATIONS ANALYSIS
● Review of main suppliers and source of raw material inputs.
● Distribution sales and marketing processes. SWOT ANALYSIS GROWTH PLAN
SUPPLY CHAIN
Description of the company's target market (within the market), specific segment, customer demographic profile, key customer accounts. OVERVIEW
ANALYSIS AND DIFFERENTIATOR MARKET SHARE ANALYSIS
INSTRUCTIONS
MARKETING, SALES AND DISTRIBUTION
TARGET MARKET
INDUSTRY
Company operations structure: location of operations, main units, assets, production lines.
: Builds on the corresponding e-CIM section. Completed by SGS COO and RM. Should be three to four pages in length.
FIRST 180-DAYS PROJECT PLAN NARRATIVE
Narrative description of the project plan outlining the key activities and corrective action plans that will be enacted during the first 180-days, post-investment.
DUE DILIGENCE TOOL | 9
INVESTMENT BREAKDOWN DESCRIPTION COST PERCENTAGE Fixed investment cost Initial Working Capital OtherRequirement Total Initial Investment Cost 100%
PLAN
● Main assumptions made that underpin the success of the growth plan materializing. Amount being sought and use of funds. Recommend using a table like this:
INVESTMENT PLAN ●
Where machines will be purchased, due diligence conducted on the suppliers. Different quotes obtained from different vendors. Reasons for selecting the vendors.
●
PROCUREMENT
FIVE-YEAR GROWTH PLAN A narrative of the five-year growth plan.
SWOT analysis findings above, and it should explain how the SGS team will add value and unlock growth for the company. This section should be four to five pages in length.
INSTRUCTIONS: Build on the corresponding e-CIM section but updates with the final financial model and projected financial statements. Should be four to five pages in length outlining the main financial drivers and assumptions and ranges of those assumptions based on the risks.
INSTRUCTIONS
Description of risks and the assumptions it might impact. Risk Mitigation Plan: What will be done if this risk materializes, and what is the resulting worstcase scenario if it does happen.
● Valuation using different methods (e.g., EV multiple, BV, DCF) and assumptions used for each.
INSTRUCTIONS: Build on the corresponding e-CIM section but updates with the definitive terms signed in the term sheet, and any modifications to those based on due diligence findings. Should be one to two pages in length. Note to author: we recommend you work with the GC, Dir. of AM and/or CIO on this section.
DUE DILIGENCE TOOL | 10 RISK ANALYSIS & MITIGATION
RISK 2 & MITIGATION PLAN RISK 3 & MITIGATION PLAN DEAL TERMS
: Build on the corresponding e-CIM section but add any additional risks discovered during formal due diligence. This might be newly discovered liabilities, litigations the company may be exposed to, issues with supplier capacity, etc. Should be three to four pages in length.
RISK 1 & MITIGATION PLAN
● Amount, type (debt, equity, mezzanine) and structure. ● Capital table.
ENTERPRISE VALUATION
FINAL TERMS AND STRUCTURE
FINANCIAL ANALYSIS
DUE DILIGENCE TOOL | 11
past three years financial performance with analysis of debt, margins, cash flow commentary. FINANCIAL DRIVERS ● Table of assumptions and those used for each scenario (bear, base, bull). FINANCIAL FORECAST BEAR CASE Model Assumptions: X Y ProductionZ KPIs: Income
ModelBASEStatementBalanceStatement:Sheet:ofCashFlow:CASEAssumptions:
X Y Z
from the structure and growth plan are needed for this and must align with the other sections of the Final CIM. HISTORICAL PERFORMANCE ANALYSIS ● Summary
X Y ProductionZ KPIs: Income
ModelBULLStatementBalanceStatement:Sheet:ofCashFlow:CASEAssumptions:
Inputs of
: Builds on the corresponding e-CIM section with updates based on formal due diligence SECTIONSfindings. 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.
U.N. SDG SUPPORTED A
IMPACT IMPROVEMENT PLAN ●
● Baseline IRIS+ metrics/KPIs and expected metrics/KPIs post-investment (table) Updated SEAF Gender Equality Scorecard “score”.
● Summary of initiatives to improve the company’s social impact, including gender-smart strategies based on due diligence findings.
DUE DILIGENCE TOOL | 12 Production KPIs: Income INVESTMENTStatementBalanceStatement:Sheet:ofCashFlow:SENSITIVITY ANALYSIS BEAR BASE BULL PAYBACKNPV PERIOD MONEY ON MONEY PROJECTEDMULTIPLE IRR SOCIAL IMPACT INSTRUCTIONS
EACH SECTION (FINANCIAL, TAX, ADMIN, LEGAL)
● A summary of the findings from due diligence is added.
FORMAL DUE DILIGENCE FINDINGS
INSTRUCTIONS
: Written by the RM with input from the different teams that completed various sections of due diligence. Special attention should be made (i.e., extra emphasis on writing) to showcase risks that were discovered during due diligence.
● A summary of the changes made to the terms based on due diligence.
● Changes to recommendations.
CONCLUSION
Summary of [INV./FUND MANAGER NAME]’s final recommendation for the investment and our case for why the investment committee should take our recommendation.
DUE DILIGENCE TOOL | 13
REVISIONS BASED ON DUE DILIGENCE
DUE DILIGENCE TOOL | 14 REFERENCES