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About CIBP™ Exam

  • CIBP™ Exam – The Coverage

    The questions appearing in the exam aim to check and validate participants' awareness and knowledge about all important concepts, processes, techniques and methodologies used in analyzing and decision-making in typical roles and jobs in Investment Banking. CIBP™ Exams steer away from basic finance and accounting, and focus entirely on the mechanics and analytics of Investment Banking. Participants are expected to be exposed to business fundamentals and also the bare basics of accounting and finance for a faster and more in-depth learning of Investment Banking.

    The exam features questions drawn from a wide selection of investment banking areas, a knowledge in which the body of knowledge defines as essential to have for individuals intending to be Investment Bankers. The framework and coverage of the exam is accurately fleshed out in the IBCA Handbook of Investment Banking, provided to every CIBP™ participant. The following topics have been specifically assigned in which the knowledge of participants are tested:

    Knowledge Areas & Topics

    PART A: Valuation and Comparable Companies Analysis
    • Selection of the Universe of Comparable Companies; studying the target; identifying Key Characteristics of the Target for Comparison Purposes; and screening target for Comparable Companies
    • Locating the Necessary Financial Information; SEC Filings: 10-K, 10-Q, 8-K, and proxy Statements; Equity Research; Press Release and News Runs; Financial Information Services; Summarizing Financial Data primary Sources
    • Spreading Key Statistics, Ratios, and Trading Multiples; Calculation of Key Financial Statistics and ratios; Supplemental Financial Concepts and Calculations, and Calculation of Key Trading Multiples
    • Benchmarking the Comparable Companies; Benchmarking the Financial Statistics and Ratios; benchmark the Trading Multiples
    • Determine Valuation of the target company using a variety of methods PV/EBITDA/ P/E and arriving at the most logical Valuation after assessing the pros and cons of each method.
    PART B: Precedent Transactions Analysis
    • Selecting the Universe of Comparable Acquisitions; Screening potential targets for Comparable Acquisitions and Examining Other Considerations
    • Locating the Necessary Deal-Related and Financial Information; listing out potential Public Targets and Private Targets and Summarizing Primary SEC Filings in M&A Transactions
    • Spreading Key Statistics, Ratios, and Transaction Multiples; Calculation of Key Financial Statistics and Ratios and Calculation of Key Transaction Multiples
    • Benchmark the Comparable Acquisitions; Determining Valuation and discussing the Key Pros and Cons
    PART C: Discounted Cash Flow Analysis
    • Studying the Target and Determining Key Performance Drivers
    • Considerations for Projecting Free Cash Flow; Projection of Sales, EBITDA, and EBIT; and Projection of Free Cash Flow
    • Calculating Weighted Average Cost of Capital by Determining Target Capital Structure, the Estimated Cost of Debt (rd) and the Estimated Cost of Equity (re).
    • Determining terminal Value using Exit Multiple Method and the Perpetuity Growth Method
    • Calculating Present Value of the acquisition; Determining Valuation of the target; Performing Sensitivity Analysis
    PART D: Leveraged Buyouts - Mechanism & Market
    • Understanding Key participants including Financial Sponsors, investment banks, Bank and Institutional Lenders and Bond Investors
    • LBO Target management: Analyzing Characteristics of a Strong LBO Candidate; Strong Cash Flow Generation; Leading and Defensible Market Positions; Growth Opportunities; Efficiency Enhancement Opportunities; Low Capex Requirements; Strong Asset Base; Proven management team
    • Economics of LBOs: Returns Analysis using Internal Rate of return; Return Analysis using Cash Return; How LBOs Generate Returns; understanding how Leverage is used to enhance Returns
    • Primary Exit/monetization Strategies: Sale of Business; Initial Public Offering ; Dividend Recapitalization; Below Par Debt Repurchase
    • LBO Financing: Structure; Primary Sources like Bank Debt, High Yield Bonds, Mezzanine Debt and Equity Contribution
    • LBO Financing: Selected Key Terms like Security, Seniority, Maturity, Coupon, Call Protection, Covenants, term Sheets
    PART E: LBO Analysis for Decision-Making
    • Locating and Analyzing the Necessary Information to determine Financing Structure and Valuation
    • Building the Pre-LBO Model using Historical and Projected Financial and Cash Flow Statements
    • Working on Deal Transaction Structure using Purchase price Assumptions; Financing Structure information, Sources of Finance, etc.
    • Completing the Post-LBO Model by Building the Debt Schedule; finalizing the 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
    • Mechanism of Auctions; Auction Structure
    • Organization and Preparation for a Sell-Side M&A deal: Identifying Seller Objectives and Determine Appropriate Sale Process; Performing Sell-Side Advisor Due Diligence and Preliminary Valuation Analysis; Selecting Buyer Universe; Preparing Marketing Materials; Preparing Confidentiality Agreement
    • First Round M&A Activities: Contacting Prospective buyers; Negotiating and Executing Confidentiality Agreement with Interested parties; Distributing Confidential information Memorandum and Initial Bid Procedures Letter; Preparing Management Presentation; Setting up Data Room; Preparing Stapled Financing Package; Receiving Initial Bids and Selecting Buyers to Proceed to Second Round; Understanding the Valuation Perspectives-Strategic Buyers vs. Financial Sponsors
    • Second Round M&A Activities: Conducting Management Presentations; Facilitating Site Visits; Providing Data Room Access; Distributing Final Bid Procedures Letter and Drafting Definitive Agreement; Finalizing Bids from buyers
    • Evaluation of Final Bids; Negotiating with Preferred Buyer(s); Selecting Winning Bidder; Rendering Fairness Opinion; Receiving Board Approval and Executing Definitive Agreement
    • Closing the deal by Obtaining Necessary Approvals from Shareholders; Financing and Closing the Negotiated Sale
    PART G: Buy-Side Mergers & Acquisitions
    • Buyer Motivation and Synergies; Cost synergies; Revenue Synergies; Acquisition Strategies; Horizontal Integration; Vertical integration; Conglomeration
    • Forms of Financing: Cash on Hand; Debt Financing; Equity Financing; Debt vs. Equity Financing; Acquirer Perspective
    • Deal Structuring; Stock Sale; Asset Sale; Stock Sales Treated as Asset Sales for Tax Purposes
    • Buy-Side Valuation; Football Field Analysis at various prices; Contribution Analysis; Merger Consequences Analysis; Purchase Price Assumptions; Balance Sheet Effects; Accretion/ Dilution Analysis; Acquisition Scenarios (50% Stock / 50% Cash; or 100% Cash; or 100% Stock)
    • First Round M&A Activities: Contacting Prospective sellers; Negotiating and Executing Confidentiality Agreement with Interested parties; Distributing Confidential information Memorandum and Initial Bid Procedures Letter; Preparing Management Presentation; Setting up Data Room; Preparing Stapled Financing Package; Receiving Initial Bids and Selecting Sellers to Proceed to Second Round; Understanding the Valuation Perspectives-Strategic Sellers vs. Financial Sponsors
    • Second Round M&A Activities: Conducting Management Presentations; Facilitating Site Visits; Providing Data Room Access; Distributing Final Bid Procedures Letter and Drafting Definitive Agreement; Finalizing Bids from Sellers
  • CIBP™ Exam Structure

    Understanding the basic structure of the CIBP™ exam is essential before attempting or preparing for the exam. The exam typically consists of 50 multiple-choice questions, some of which are fact-based, while others are numeric or argument-based.

    Fact-based questions

    Fact-based questions directly test the examinee’s ability to correctly and precisely recollect concepts, principles, techniques, and generally accepted practices in contemporary investment banking. Examinees' answers to these types of questions will reflect their awareness and comprehension of critical concepts and issues as covered in the IBCA body of knowledge.

    Numeric or argument-based questions

    Numeric or argument-based questions test the participants' understanding of concepts, principles, and techniques at an advanced level and their ability to apply their understanding and knowledge to real-world scenarios.

    Scoring pattern

    There is only one correct answer to fact-based and numeric or argument-based questions, and examinees are scored only if the correct option is selected.

    Please note:
    • Participants will have 90 minutes to complete the exam
    • Some exams may feature only fact-based or only numeric/ argument-based questions
    • The number of questions may change without notice
  • The Objectives and Principles Underlying the Design of Exam

    The exam aims at validating the participants' potential and capacity to effectively perform an array of tasks across the entire spectrum of investment banking sub-domains. The exam system validates this potential through assessing participants' knowledge about investment banking theory and practice and their ability to apply this knowledge to achieve excellence in their performance. These exams are designed on standards from the Standardized Knowledge Architecture for Practice Excellence. The IBCA Body of Knowledge has been engineered to redefine the profession of investment banking in the 21st century.

    CIBP™ Exams test participants on their knowledge of the state of the art principles, theories and generally accepted analysis and decision-making techniques, approaches, methods and practices. These exams expect that individuals being assessed for their CIBP™ program read the material contained in the IBCA Investment Banking Handbook and maintain familiarity with the latest in Investment Banking theory and practice by reading journals and books, listening to podcasts of experts.

  • Qualifying the Exam

    Usually, a cumulative score of 65%-70% in the exam can be deemed qualification worthy. However, an examinee's real, individual scores do not decide the recommendation for the award. Instead, a complex algorithm is used to make award decisions which nullify geographic and other environmental factors with potential to skew performance. As such, the certifying benchmark should not be expected to stay pegged at an exact number for pass/fail.

  • Preparing for the CIBP™ Exam

    CIBP™ exam aims at validating the candidate's potential and capacity to effectively perform the tasks across the entire spectrum of sub-domains within the Investment Banking industry. It is extremely important for IBCA to assess and validate the potential and capabilities of all the candidates before the award of the CIBP™ Charter.

    All CIBP™ examinees must focus on widening their perspective of Investment banking. Young professionals aspiring to break into and grow their careers in the Investment banking space need to put in more effort. While the CIBP™ Resource Box contains books and guidelines on how to study for the exam, additional research should be done to properly prepare for the exam. Investment banking is an evolving discipline and will perhaps never become an exact science. Attempts to understand such disciplines through one book or a set of books restrict our understanding of them across all dimensions that they need to truly be understood.

    As the world’s leading credentialing body in Investment banking, IBCA shoulders the onerous responsibility of covering the entire landscape of contemporary Investment banking, and everything else that may be connected to it. IBCA can clearly state that it has assessed and validated every individual across all the areas that impact or possess the potential of professional capabilities for practicing Investment banking.

    CIBP™ makes an impact on the professional capabilities of charterholders. While CIBP™ examinees are clearly advised to use the IBCA Handbook on Investment banking – as the master reference for preparing for their exams, the handbook is one piece in preparation to build a longer–lasting base of knowledge and a more in-depth perspective of the most advanced concepts related to Investment banking completely for the CIBP™ examination. For external resources and modes you can use to expand your understanding of Investment banking and better prepare for your CIBP™ examination, please refer to the IBCA Exam Guide available for download from your myIBCA dashboard. Although a sizable number of questions in a typical CIBP™ exam are certainly drawn from content that is available in the Handbook, it is also possible that a few questions may arrive from sources other than the textbook provided to candidates. The topics of all exam questions are present in the handbook, which gives a sound knowledge of all the concepts required for necessary depth. While the learning resources contain books and guidelines on how to study for the exam, additional research is required to prepare well for the exam.

    Therefore IBCA strongly advises all CIBP™ examinees to research other online and offline resources to increase their knowledge and awareness about how Investment banking impacts business and other various industries and also how globally several organizations today expect to help them navigate successfully into the future.

    To ensure that all CIBP™ candidates develop themselves into the most dynamic and best young international professionals, IBCA advises they read extensively on the subject from as many sources as possible.

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