Definition:

Capital IQ is a financial information repository sponsored by S&P to gather information on companies, industries, markets, etc.

• What it is: Capital IQ collects, scrubs, interprets, and analyzes public data, aggregating over 135 billion data points a year to become a leading provider of research in the financial services sector. These data points consist of financial news, market- and sector-specific insights, and company performance. It is widely used by investment bankers, stock traders, hedge and mutual funds, private equity, M&A searchers, etc. It organizes historical information on companies, markets, transactions, and people worldwide, providing clients with the data necessary to analyze company fundamentals, build financial models, screen for investment ideas, and execute other financial research tasks.

• What it does: Provides financial and industry information about companies to allow investors and business leaders to make informed investment, M&A, and business decisions.

Uses:

• How is it used: Users of Capital IQ will complete searches and screenings of information to obtain financial and investment information and make informed decisions. Some user-friendly features are its chart builder, screening tool, and Excel plug-in modeling tools. Capital IQ is organized by six top menu options: My Capital IQ, Companies, Markets, Screening, Charting, and Coverage.

• Where: Capital IQ is a paid service used at many financial institutions, including the following:

• Investment banks

• Commercial banks

• Hedge funds

• Consulting firms

• Venture capital firms

• Private equity firms

• Institutions investors

• Corporations

• Why: Having the right financial and industry information at the right time, sorted and displayed in the right way, is critical to allow financial analysis to make the proper recommendations for their organizations.

Limitations:

• Where it shouldn't be used: Capital IQ is an expensive paid service and should not be used by companies and organizations that have limited need for that type of information. It would be in their best interest to contact a consulting firm with experience in its use to gather and display the needed information for the infrequent use situations.

• Any restrictions: Paid service

• Warnings: Sophisticated analysis can be misused by inexperienced and untrained analysts. Be sure that someone trained in science and art is involved in the analysis using Capital IQ or other sophisticated financial search engines.

Demonstrations:

• Introduction to S&P Capital IQ 

• Install Capital IQ Plug-In for Excel

• Capital IQ Financial Statement and Stock Price Downloads

• Using the screening tool on Capital IQ

• Event Study Using Excel and Capital IQ

Step-by-Step Process:

• Get training from one of the many sources above or a quick-start outline like the following link: Capital IQ Quick Start Guide.

• Gather the required data: There is a variety of data available, some of the main categories include the following:

• Financials

• Key statistics

• Public filings

• Transaction history

• Trends

• Transactions

• Key companies

• Public comparables analysis

• Present transaction analysis

• Investment opportunities

• Partner opportunities

• Company

• Industry

• Screening

• Utilize the screening, charting, and Excel plugins for analysis.

• Interpretation of results takes practice, training, and developed expertise.

Template for Capturing Data:

Templates are built into the Capital IQ system.

Output Representation and Recommendations:

There are a variety of output representations that will support the recommendations from the Capital IQ analysis. Look for output tables, charts, graphs, and representations built into Capital IQ.

Examples:

• Capital IQ Quick Start Guide

Additional Resources:

• Capital IQ Training Presentation Video

• Capital IQ Investopedia