Roadmap Advisors

Middle-Market Strategic M&A Advisory Firm

Roadmap Advisors

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Office building with a large room full of tables and people working and part of the staff walking between the tables. Blurred people long exposure

A Confidential Information Memorandum (CIM) is the primary marketing document in any sell-side M&A process. Its role is to provide buyers with a comprehensive view of the business while positioning it as a compelling investment opportunity. When running a sell-side process, we often hear from buyers something along the lines of “We had lots of questions, but as we read through the CIM, our questions kept getting answered. It’s like you anticipated what we wanted to ask.”

An experienced investment banker, through the ups and downs of many completed deals, should be able to identify which issues are most important to potential buyers. This information is not the same across industries, business sizes, or situations. Regardless, a strong CIM makes the sale process go more smoothly by establishing credibility early on, short-cutting a lot of 1-to-1 question and answer sessions, and setting the tone for an efficient due diligence period.

Below are some of the sections we typically include in a sell-side CIM.

Executive Summary

This section summarizes the business for an executive that isn’t willing to invest the time to read a 50+ page document. If you only had 5 slides to showcase your “elevator pitch,” what would it be? At the very least, it should provide a very clear description of business model and go-to-market, the financial picture of the company, the type of transaction sought, and provide a “pitch” for why one might be interested.

technical financial graph on technology abstract background

Business Overview

This section lays out the business in greater detail. What are the products or services offered? Who is on the management team? What types of customers or clients do you serve? How are products/services marketed, delivered, charged for, etc.? How does the business compare to competition? Without giving away your “secret sauce”, you should give buyers a very clear understanding of how your business works.

Growth Opportunities

The growth section is a critical aspect of every Roadmap Advisors CIM. Whether or not our clients come to us with a fully vetted “growth plan,” we typically sit down with management for hours to brainstorm the best ways a new owner might grow the business. These are strategies specific to your business. Sometimes geographic expansion makes the most sense, and sometimes it’s irrelevant. Perhaps it involves landing more channel partners or retailers, launching new product lines, optimizing pricing, leveraging new technology, or investing in high ROI marketing. There is no right answer, but buyers do appreciate a concrete plan that helps them underwrite your growth story.

Market Overview

The market section is primarily intended for private equity buyers or strategics from a tangential industry. It describes the macro dynamics in the industry, the growth, market size, trends, competitors, and regulatory dynamics. Buyers already in the industry tend to ignore this section, but nevertheless, it helps paint the broader picture of how the company operates.

Financials

Understanding company financials is crucial before making stock market investments

A robust financial section should show historical financials, KPIs, and forward projections. P&Ls and balance sheets should be cleanly laid out. Revenue breakdowns, margin profiles, and EBITDA adjustments should be included so that buyers can have a solid understanding of the financials after a quick read through the section. For buyers that engage at IOI stage, we often also provide a “datapack” in Excel format, so that all financial details can be easily inserted in buyers’ models.

The CIM is the central document of a sell-side process. It can elevate a business, even in the eyes of sophisticated buyers. A strong CIM creates created efficiency in a process, which ultimately reduces seller distraction and drives better outcomes.

Connect with Roadmap Advisors Today

At Roadmap Advisors, we understand that a well-crafted CIM is more than just a marketing document—it’s a strategic tool that sets the tone for the entire sale process. If you’re considering a sale, let us help you put your best foot forward. Partner with Roadmap Advisors to craft a CIM that drives engagement, builds buyer confidence, and leads to stronger outcomes.

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Sell-Side M&A Advisor Speaking To Board About Their Business Exit Options

Making the hard decision to exit a business is one of the most consequential moves an owner can make. In 2025, shifting market dynamics, tighter capital conditions, and a recalibrated private equity environment are reshaping how and when owners can step away.

Factors such as fewer IPOs, increased private deal activity, and new tax considerations have made the exit conversation more relevant than ever.

Having a firm understanding of the range of available paths out there, each with its own tradeoffs in timing, valuation, tax impact, and complexity, can help business owners prepare with clarity and confidence.

Common Exit Routes & What To Expect

Each exit path has different expectations around timing, valuation, deal complexity, and tax implications. Owners must weigh these differences carefully when mapping their next steps.

Strategic Sales

Strategic sales often appeal to sellers aiming for a full cash-out and maximum valuation. These deals involve competitors or industry consolidators and usually deliver 100% of proceeds at closing, sometimes with an earn-out based on future performance. Sellers should prepare for a detailed due diligence process and possible cultural alignment issues. In 2023, in the lower-middle market, strategic buyers paid an average of 6.8× EBITDA.

Private Equity

Business Owner Signing A Letter Of Intent

Private equity offers another avenue, ranging from full buyouts to minority recapitalizations or rollovers into continuation funds.

These deals tend to close faster than IPOs and often allow owners to keep a stake, offering upside in a future sale.

Sellers typically go through several weeks of financial diligence before signing a letter of intent, and valuations vary, usually falling between 6× and 10× EBITDA depending on the company profile.

Initial Public Offerings (IPOs)

Initial Public Offerings remain a high-profile option but are rarely practical for smaller companies. They require significant preparation, including SEC compliance and underwriter involvement, and liquidity is staged over time. Costs can be steep, and current market conditions make this route less attractive than in prior years.

Management Buyouts

Management buyouts place the business in the hands of the existing leadership team, which often combines senior debt, seller financing, and rollover equity. While appealing from a continuity standpoint, they can be difficult to fund unless managers have access to significant capital. The resulting debt load can also weigh on future operations.

Employee Ownership Models

Employee ownership models, such as ESOPs in the US and EOTs in the UK, create a gradual transition while offering tax advantages. In the US, owners who sell at least 30% of their C-corp to an ESOP may defer capital gains taxes under IRC §1042.

Family Succession

Father & Daughter Preparing For A Family Succession Of Their Business

Family succession involves passing ownership to the next generation.

Valuation may be discounted to reflect financing limitations and estate planning goals.

This route takes time and requires early involvement of heirs in management.

Proper planning using gift exemptions, which stand at $13.61 million in 2025, can reduce long-term tax exposure.

Liquidation & Bankruptcy

Liquidation and bankruptcy represent last-resort options to consider. Liquidation often brings lower returns, particularly for service businesses, and may yield less than the company’s net working capital. Bankruptcy filings, whether through Chapter 11 restructuring or Chapter 7 liquidation, involve court oversight and leave owners with limited control over outcomes.

Tax & Financing Considerations

Taxes remain one of the most impactful variables in any exit. Long-term capital gains rates top out at 20% federally in 2025, with an additional 3.8% net investment income tax. 

Sellers of Qualified Small Business Stock (QSBS) may benefit from exclusions under Section 1202, potentially shielding up to 100% of gains if holding requirements are met.

Financing tools can shape the structure of a transaction. SBA 7(a) loans, popular in management buyouts and partner exits, remain a preferred funding source, although lender fees were reinstated in March of 2025. Limits currently cap at $5 million, making them especially relevant for lower-middle-market transactions.

Some states apply franchise or gross-receipts taxes post-sale, which can impact an organization’s net proceeds. Early review of both federal and state-level obligations is necessary for accurate net-valuation modeling.

Steps To Prepare For a Future Exit

Sell-Side Mergers & Acquisitions Advisor Consulting Business Owner On Their Future Exit

Effective preparation improves deal outcomes and gives owners more leverage during negotiations. The process starts with identifying personal goals, such as income needs, legacy ambitions, or employee transition preferences.

Getting a valuation early helps set expectations and highlight any value gaps. Despite this, only 15% of owners seek a formal appraisal prior to launching a sale process. Engaging the right advisory team, including an M&A attorney, tax professional, and financial planner, adds significant value.

Financial statements should be cleaned up, with audited or reviewed financials strongly preferred by private equity and IPO buyers. Once a buyer is identified, a signed letter of intent locks in headline terms while allowing for final diligence and contract negotiation.

After closing, attention should shift toward post-sale planning. That may include wealth preservation, reinvestment of proceeds, estate planning, and managing any earn-out periods still in effect.

Owners who take the time to prepare early and understand their options often enter the process with more confidence and end it with better results.

Making The Right Move At The Right Time

Choosing how to exit a business isn’t about finding the one perfect answer; it’s about understanding the full range of possibilities and aligning them with personal goals, company dynamics, and market realities. 

If you’re currently considering a sale, recapitalization, or succession plan, Roadmap Advisors brings deep experience in valuations, buyer outreach, due diligence, and strategic transaction execution. 

Our team works with owners across the lower-middle market to drive successful outcomes in even the most complex transitions. To begin a confidential conversation, reach out to our team by scheduling a consultation online.

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businessman team working at office with document on his desk

EBITDA has become a widely used metric in business and investing circles, yet it’s often misunderstood or misused. Short for earnings before interest, taxes, depreciation, and amortization, EBITDA aims to reflect a company’s core operating performance. It’s frequently cited in dealmaking, private equity, and financial reporting, but its popularity can mask some real limitations.

In this article, we break down what EBITDA really means, how it differs from similar metrics, why investors rely on it, and where caution is warranted.

What EBITDA Really Means

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It offers a snapshot of a company’s operational performance, stripped of financial structure and accounting choices. The idea is to isolate profit generated through normal business activity, without the noise of financing decisions, local tax rules, or large non-cash charges.

To calculate EBITDA, analysts usually start with net income and add back interest expense, tax expense, depreciation, and amortization. Some prefer starting with EBIT (earnings before interest and taxes) and then adding depreciation and amortization from there. 

Either method leads to the same place: a figure that gives an idea of recurring operational earnings before non-operating or accounting-driven items come into play.

How EBITDA Differs From EBIT & Operating Income

While EBITDA and EBIT are often mentioned together, they are not interchangeable. EBIT stops after removing interest and taxes from net income, leaving depreciation and amortization untouched. EBITDA goes further by removing those as well, which often leads to a larger number, especially for companies with significant fixed assets.

For companies with heavy capital investment, such as telecom providers or energy infrastructure firms, EBITDA can look much stronger than EBIT. It can create a more favorable image of profitability, even though those non-cash expenses represent real long-term costs tied to equipment and assets.

Why Investors Focus On EBITDA

EBITDA remains popular because it smooths out differences that can make comparing businesses difficult. Interest expense depends on a company’s financing choices, which vary widely. Some companies carry significant debt; others stay nearly debt-free. EBITDA removes this variable, which can help investors compare operational efficiency across different capital structures.

laptop, team and business people in discussion, meeting and pitch ideas in office

Tax expense is another factor that varies by location, regulation, and specific tax credits or deductions. Stripping out taxes offers a clearer view of how a business performs before jurisdictional differences come into play. Depreciation and amortization are non-cash expenses, often tied to past investment decisions or intangible assets. While EBITDA excludes non-cash charges, it does not account for working capital changes or capital expenditures, making it a rough estimate of operational performance, not actual cash flow. Because of these qualities, EBITDA often plays a role in debt agreements, especially when setting performance covenants. 

It also serves as the denominator in common valuation multiples like EV/EBITDA, which compares enterprise value to operational performance. In stable industries, 8 to 10 times EBITDA is often cited as a fair range. Growth sectors like SaaS can see multiples as high as 14 to 18 times, depending on market conditions and expectations.

Where EBITDA Can Mislead

Despite its usefulness, EBITDA has received its share of criticism. Some have criticized that removing depreciation and amortization ignores the real cash costs of maintaining and replacing business assets.

Asset-heavy businesses often show strong EBITDA while still bleeding cash. Airlines, for instance, may report a positive EBITDA figure even during years when their capital expenditures far exceed their cash from operations.

Adjusted EBITDA is another metric that often raises questions; companies often modify the standard EBITDA calculation by adding back items they label as non-recurring. Some of these adjustments are reasonable. One-time restructuring costs, disaster-related losses, or asset impairments can distort a company’s normal earnings, so excluding them helps clarify the core picture.

Others, though, are more questionable. Various factors such as ongoing legal fees, stock-based compensation, and regular rent adjustments appear frequently in SEC comment letters, flagged as inappropriate if presented as “non-recurring.”

In M&A, adjusted EBITDA plays a key role in purchase price negotiations and is often the basis for valuation, earn-outs, or debt covenant compliance. Because of this, both buyers and sellers must carefully vet what counts as an “adjustment.”

The SEC has increased its scrutiny of these adjustments, noting in a 2024 review that nearly 30% of comment letters involved concerns with non-GAAP metrics like adjusted EBITDA. While SEC scrutiny primarily affects public companies, private company sellers preparing for a sale should still follow best practices in labeling and justifying adjustments to avoid valuation disputes.

EBITDA Margin Shows Efficiency

EBITDA margin is calculated by dividing EBITDA by total revenue, revealing how much profit is produced per dollar of revenue, before factoring in interest, taxes, or depreciation.

Margins can vary widely between sectors. Industrial REITs often report margins north of 70% due to steady rental income and low overhead. At the other extreme, early-stage biotech firms can post negative margins, sometimes reaching negative 100% or more, as they spend heavily on R&D without matching revenue.

Charts or heat maps that show average EBITDA margins by sector can help readers benchmark their own company’s performance or assess how an acquisition target stacks up.

What To Take Away From EBITDA

EBITDA is a widely used tool in financial analysis, offering a clearer look at operational earnings across industries and business models. It strips away many of the variables that complicate comparison, which makes it appealing to investors, lenders, and business owners alike.

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Still, its usefulness depends on how well it’s applied. To truly understand these metrics, you need to consider the bigger picture. If you’re considering a business sale, planning an acquisition, or evaluating investment opportunities, a strong grasp of EBITDA is just the starting point. Roadmap Advisors works with business owners, investors, and family offices to provide transaction insight backed by real-world experience.

To learn more, connect with our experienced M&A Advisors by scheduling a consultation online today.