What is a Confidential Business Profile?

By Generational Equity


Recently I participated in a webinar on “teasers”, AKA Confidential Business Profiles (CBP). Teasers are critical documents in the M&A process. Essentially this is the one/two-page overview that you send to your target companies that outlines and highlights your investment opportunity to them. As you can imagine, these teasers are critical to successfully attracting interest in your business.

The webinar was hosted by The M&A Source and was led by Lamar Stanley, a vice president with Gen Cap America (GCA), a private equity firm whose primary objective is to partner with owners and management teams who have a willingness to operate and grow successful businesses. In all investments, senior management is involved in equity ownership, giving them a meaningful stake in the success of the business.

GCA is a partner with management teams who wish to invest in their companies by becoming part of the buying group. Recapitalizations are also structured for business owners who desire immediate liquidity, yet wish to participate in the growth of their business by maintaining operating control.

Mr. Stanley has been involved in the private equity world for a number of years and is a great source of knowledge regarding what it takes to create a fantastic Confidential Business Profile. Last year, his firm looked at 500 opportunities (teasers) and invested in just four of them. That means that your CBP needs to be able to capture the attention of fellows like Stanley, and do so quickly!

Here are some of the keys to a great CBP according to Mr. Stanley:

  1. Clarity is key: Be clear on how the company generates revenue
  2. Provide facts regarding when the company was founded, sales mix, industry niche
  3. Three years of revenue and EBITDA (earnings before interest, taxes, depreciation and amortization)
  4. At least two years projected revenue and EBITDA (the more years the better)
  5. Describe what the owner wants out of this transaction?
  6. Four or five bullet points regarding the strengths of the company
  7. Confidentiality is key!!!

The last bullet point above really highlights the challenge of creating an eye-catching M&A teaser: Disclose as much as you can without identifying who you are! 

This is a real skill and one of the many reasons that our deal team at Generational Equity is so successful. We maintain our client’s confidentiality at all costs. The key is disclosing enough information to get the buyers to sign a non-disclosure agreement (NDA), while at the same time not providing them with too much information to figure out who your company is. 

Our firm has been named Investment Banking Firm of the Year three consecutive years by The M&A Advisor for one reason: We do a great job of finding and attracting buyers for our clients. If you are going to be on your own without representation, be sure to be very careful when you create your Confidential Business Profile. 

If you would like to learn more about the M&A process and how you can find buyers for your business, please reach out to us at 972-232-1121 or visit our website, provide your contact info and we will be in touch. 

One key thought: You never get a second chance to make a first impression with a buyer prospect. Make sure your teasers are clear, concise, accurate, and appealing.

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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