How I Screen a CIM in 30 Minutes Before I Build a Single Model

I used to spend 4 to 6 hours building a full model on every deal that looked interesting. I realized I was doing the work in the wrong order. Most of those deals failed the same basic checks that I could have run in 30 minutes before I touched a spreadsheet. This is exactly what I go through now before I build anything. - Revenue quality first I go straight to the revenue breakdown before I read anything else in the CIM. I want to know two things: what percentage comes from the top three customers, and whether any of it is recurring. On an IT MSP deal, if the top customer is more than 25% of revenue and there is no multi-year contract in place, I note it and keep reading, but my valuation ceiling just dropped. If revenue is entirely project-based with no recurring component, I close the CIM. SBA lenders do not love that story, and neither do I. - Owner dependency Page two of almost every CIM has a management overview. I look for how many times the owner's name appears in the day to day operations description. If they are the primary relationship holder for key accounts, the lead technician, and the person who approves every vendor invoice, the business does not run without them. That is not automatically a pass, but it changes the replacement salary assumption significantly, and I want to know that before I model anything. - EBITDA to cash conversion Broker-adjusted EBITDA and the actual cash the business generates are two different numbers. I take the adjusted EBITDA, subtract what I would actually pay a GM to run the business, and subtract a rough tax number. If what is left does not clear SBA debt service at the asking price at a conservative growth assumption, I stop. I do not build a model to confirm what the 30-minute check already told me. - What I am actually deciding in 30 minutes Not whether the deal is good. Just whether it is worth 4 hours of my time to find out. Most are not. Out of 50+ CIMs I have looked at, maybe 15 made it past this screen to a full model. The ones that did not fail the same three things almost every time: customer concentration with no contracts, full owner dependency, and an EBITDA number that only works at the broker's salary assumption. The screen is not diligence. It is the filter that protects your time before diligence starts.