About CIBP™ Exam

Knowledge Areas & Topics

• PART A: Valuation and Comparable Companies Analysis

  17.5%

  • Studying and Identifying Key Characteristics for Comparison; Screening for Comparable Companies; Selecting Key Companies for Comparison
  • Locating Essential Financial Information; Utilizing SEC Filings: 10-K, 10-Q, 8-K, Proxy Statements; Leveraging Sell-Side Equity Research, Press Releases, News Sources; Summarizing Financial Data from Primary Sources
  • Analyzing Key Statistics, Debt and Interest Coverage Ratios, and Trading Multiples
  • Benchmarking Comparable Companies; Comparing Financial Ratios and Statistics; Evaluating Trading Multiples Over Time and Benchmarking Against the Index
  • Determining Valuation of Target Company using Various Methods (EV/EBITDA or EV/EBIT P/E); Selecting Most Appropriate Valuation Method after Weighing Pros and Cons in the Context

• PART B: Precedent Transactions Analysis

  15%

  • Understanding the Universe of Comparable Acquisitions; Rigorous Screening of potential targets for Comparable Acquisitions and Comprehensive Evaluation of Additional Considerations
  • Navigating Deal-Related and Financial Information; Compilation of potential Public Targets and Private Targets
  • Unveiling Key Statistics, Ratios, and Transaction Multiples; Calculation of Crucial Financial Metrics and Ratios, including Accurate Calculation of Essential Transaction Multiples
  • Establishing a Benchmark for Comparable Acquisitions; Precision in Valuation Determination and Detailed Exploration of Key Advantages and Disadvantages
  • Evaluating Comparable Transactions’ Estimated Revenue and Cost Synergies vs Realized Synergies

• PART C: Discounted Cash Flow Analysis

  15%

  • In-depth Study of the Target and Identification of Core Performance Drivers
  • Projection Considerations for Free Cash Flow; Accurate Projection of Sales, EBITDA, and EBIT; Precision in Free Cash Flow Projection
  • Rigorous Calculation of Weighted Average Cost of Capital, encompassing Target Capital Structure Determination, Estimated Cost of Debt (rd), and Estimated Cost of Equity (re)
  • Terminal Value Calculation via Exit Multiple Method and Gordon Growth Method
  • Prudent Calculation of Present Value for the acquisition; Precise Valuation Determination for the target; Thorough Execution of Sensitivity Analysis

• PART D: Leveraged Buyouts - Mechanism & Market

  12.5%

  • Comprehensive Understanding of Key Stakeholders, including Financial Sponsors, Investment Banks, Bank and Institutional Lenders, and Bond Investors
  • LBO Target Management: Analyzing Characteristics of a Viable LBO Candidate; Rigorous Assessment of Cash Flow Generation, Market Positions, Growth Prospects, Efficiency Enhancement Potential, Capital Expenditure Requirements, Asset Base, and Management Team Proficiency
  • Economics of LBOs: Returns Analysis through Internal Rate of Return; Returns Assessment via Cash Return; Insight into how LBOs Generate Returns and the Role of Leverage in Enhancing Returns
  • Core Strategies for Exit/Monetization: Business Sale; Initial Public Offering; Dividend Recapitalization; Below Par Debt Repurchase
  • LBO Financing: Structural Components; Primary Sources including Bank Debt, High-Yield Bonds, Mezzanine Debt, and Equity Contribution
  • LBO Financing: In-depth Analysis of Key Terms such as Security, Seniority, Maturity, Coupon, Call Protection, and Covenants

• PART E: LBO Analysis for Decision-Making

  15%

  • Proficiently Accessing and Analyzing Information for Optimal Financing Structure and Valuation Determination
  • Creation of the Pre-LBO Model via Historical and Projected Financial and Cash Flow Statements
  • Detailed Crafting of Deal Transaction Structure, encompassing Purchase Price Assumptions, Financing Structure Details, and Finance Source Identification
  • Thorough Completion of the Post-LBO Model through the Construction of the Debt Schedule, Finalization of Pro Forma Income Statement from EBIT to Net Income, Pro Forma Balance Sheet, and Pro Forma Cash Flow Statement

• PART F: Sell-Side Mergers & Acquisitions

  12.5%

  • Deconstructing Auction Mechanism; Insight into Auction Structures
  • Strategic Organization and Preparation for Sell-Side M&A Deals: Aligning with Seller Objectives; Formulating Appropriate Sale Processes; Conducting Sell-Side Advisor Due Diligence; Preliminary Valuation Analysis; Strategically Selecting Buyer Pool; Crafting Effective Marketing Materials; Implementing Confidentiality Agreements
  • Initial Round of M&A Activities: Engaging Potential Buyers; Negotiating and Executing Confidentiality Agreements; Distributing Comprehensive Confidential Information Memorandum and Initial Bid Procedures Letter; Formulating Effective Management Presentations; Establishing Data Room; Facilitating Stapled Financing Package; Vet initial Bids and Identifying Candidates for Second Round; Distinguishing Valuation Approaches - Strategic Buyers vs. Financial Sponsors
  • Subsequent Round of M&A Activities: Facilitating Management Presentations; Coordinating Site Visits; Providing Data Room Access; Dispensing Final Bid Procedures Letter; Drafting Definitive Agreement; Finalizing Bids from Buyers
  • Scrutinizing Final Bids; Effective Negotiations with Preferred Buyer(s); Discerning the Winning Bidder; Issuance of Fairness Opinion; Board Approval and Definitive Agreement Execution
  • Culmination of the deal by Securing Requisite Shareholder Approvals; Financing and Effectuating the Negotiated Sale

• PART G: Buy-Side Mergers & Acquisitions

  12.5%

  • Buyer Motivation and Synergy Analysis; Assessing Cost and Revenue Synergies; Exploring Acquisition Strategies - Horizontal Integration, Vertical Integration, Conglomeration
  • Comprehensive Overview of Financing Forms: Cash on Hand, Debt Financing, Equity Financing; Discerning between Debt and Equity Financing from the Acquirer Perspective
  • Insightful Deal Structuring: Stock Sale, Asset Sale; Unpacking Stock Sales Treated as Asset Sales for Taxation Purposes
  • Methodical Buy-Side Valuation; Analyzing Football Field at Various Prices; Conduction Contribution Analysis; In-depth Merger Consequences Analysis; Incorporating Purchase Price Assumptions; Evaluating Balance Sheet Implications; Undertaking Accretion/Dilution Analysis; Exploring Various Acquisition Scenarios (e.g., 50% Stock / 50% Cash; 100% Cash; 100% Stock)
  • Initial Round of M&A Activities (continued): Initiating Contact with Potential Sellers; Negotiating and Executing Confidentiality Agreements; Distributing Comprehensive Confidential Information Memorandum and Initial Bid Procedures Letter; Creating Management Presentations; Establishing Data Rooms; Facilitating Stapled Financing Package; Reviewing Initial Bids and Identifying Sellers to Proceed to Second Round; Differentiating Valuation Approaches - Strategic Sellers vs. Financial Sponsors
  • Subsequent Round of M&A Activities (continued): Conducting Comprehensive Management Presentations; Arranging Site Visits; Facilitating Data Room Access; Dispensing Final Bid Procedures Letter; Drafting Definitive Agreements; Finalizing Bids from Sellers; Comprehensive Evaluation of Seller Proposals
  • Evaluation of Final Bids; Effective Negotiations with Preferred Sellers; Selecting the Winning Bidder; Rendering Fairness Opinions; Securing Board Approval and Executing Definitive Agreements
  • Successful Closure of the Deal: Obtaining Mandatory Approvals from Shareholders; Securing Financing and Concluding the Negotiated Acquisition
  • The CIBP™ examination comprehensively evaluates a candidate's grasp of the intricate facets of Investment Banking across these vital knowledge areas, enabling a thorough understanding of the practices and principles that underlie successful investment strategies and decision-making processes.