deal-screening

Deal Screening

Buy-side consultants, PE associates, and corporate development teams waste critical evaluation hours manually stripping corporate jargon from CIMs to find core data. This skill automates target screening and IOI generation.

When to Use

• Evaluating an inbound CIM or teaser from a sell-side bank
• Screening multiple targets simultaneously for a buy-side mandate
• Generating a customized IOI for an attractive target
• Building a rapid valuation view before investment committee review

The /cim-extract Protocol

How It Works

Deliberately bypasses CIM formatting entirely. Instructs the AI to ignore narrative prose and extract only:

• Quantitative assertions: Revenue, EBITDA, margins, growth rates, customer metrics
• Explicit strategic claims: Market position, competitive moats, expansion vectors
• Management adjustments: Proposed EBITDA add-backs with stated rationale
• Key risk indicators: Customer concentration, churn rates, capex requirements

Output Format

## CIM Extraction Summary — [Target Name]

### Financial Snapshot
| Metric | FY-2 | FY-1 | LTM | Mgmt Projection |
|--------|------|------|-----|-----------------|
| Revenue | | | | |
| Gross Margin | | | | |
| Adj. EBITDA | | | | |
| EBITDA Margin | | | | |
| Free Cash Flow | | | | |

### Proposed EBITDA Adjustments
| Add-Back | Amount | Rationale | Defensibility |
|----------|--------|-----------|---------------|
| | | | High / Medium / Low |

### Key Metrics
- **Customer concentration**: Top 10 = [X]% of revenue
- **Churn rate**: [X]%
- **CAC / LTV ratio**: [X]
- **Organic growth rate**: [X]%

### Investment Highlights (seller's claims)
1. [Claim] — [Supporting data point or "UNSUBSTANTIATED"]

### Red Flags
- [Identified concerns from the data]

### Verdict
[Quick BUY-SIDE assessment: Advance / Further Diligence / Pass]

IOI Memorandum Generation

Key Sections

Section	Focus
Purchase Price Range	Enterprise valuation estimate, expressed as EBITDA multiple
Transaction Structure	Asset vs. stock, cash/equity/rollover/earn-out mix
Sources of Financing	Proof of funds, committed equity, anticipated leverage
Key Assumptions	Metrics the valuation relies upon
Due Diligence Scope	Remaining access required to reach definitive agreement
Timing & Approvals	Timeline to LOI and investment committee requirements

AI-Assisted IOI Workflow

1. Ingest the target's CIM and the buyer's investment committee memos
2. Map buyer's strategic rationale to seller's growth pillars
3. Generate bespoke IOI that feels tailored (not a form letter)
4. Align the offer structure directly with CIM's identified opportunities

Operating Guidelines

• Never trust sell-side EBITDA at face value — always flag adjustments for validation
• Distinguish between organic and inorganic (M&A-driven) revenue growth
• Flag customer concentration above 20% for any single customer
• For IOIs, ensure the valuation range is defensible with stated methodology
• Time saved: 3-5 hours per CIM screening; IOI drafting gives massive competitive advantage in auctions

Examples

Input: "Screen this CIM. Key criteria: >$20M EBITDA, >70% gross margin, <12x EV/EBITDA."

Screening output:

Criterion	Target	Finding	Pass/Fail
EBITDA	>$20M	$23.4M (adj.)	✅ Pass
Gross margin	>70%	68%	❌ Fail
EV/EBITDA (ask)	<12x	14.5x implied	❌ Fail
Customer concentration	<20% top customer	Top customer = 31%	⚠️ Flag

Recommendation: Pass. Gross margin and valuation both miss. Note concentration risk for future reference.

Troubleshooting

Problem	Cause	Fix
CIM doesn't disclose key metrics	Sell-side omission	Flag gaps in screening report; request data room access or submit IOI with conditions
Adjusted EBITDA looks inflated	Aggressive add-backs	Challenge non-recurring items; apply QoE discount pending diligence
Too many deals passing screening	Criteria too loose	Tighten thresholds or add negative criteria (e.g., "no government revenue >30%")