You're the director of new business acquisitions at Pearl's Famous Jam, Inc. and in late 2019 you received a preliminary 'tickler' from an investment banker regarding a target company represented by the investment banker. It asks whether you're interested and, if so, includes a Non-Disclosure Agreement ("NDA") that you can sign and return. Once received, you'll be given a detailed Confidential Information Memorandum ("CIM"). The company may be of interest to Pearl's Famous Jam, Inc. because it is a leader in a new, fast growing category in your industry, which otherwise is somewhat mature. In the document you're reviewing, the statement is made that Pearl's Famous Jam, Inc.'s success is based on their 'secret manufacturing processes'.

The preliminary document includes the following summary of recent and projected financial performance:

	2018	2019	P2020	P2021	P2022
Revenues	$4,000	$6,000	$10,000	$14,000	$16,000
Projected EBITDA Margin %	10.0%	15.0%	20%	20.%	20.0%
Free Cash Flow	$100	$700	$1,800	$2,500	$3,000

 

The document also mentions that all manufacturing is conducted at a single facility, which is, 2019, operating three shifts per day and operating at 95% of capacity during each shift.

As you review the document and make some preliminary calculations, something isn't making sense and  your skepticism increases. A number of questions come to mind that you hope are answered to your satisfaction in the CIM, which of course you'll want to see.

1. What are those questions?
2. What observations or analysis gives rise the questions you wish to ask?