Decoding a Pitchbook & it’s uses in Investment Banking

Published On February 11, 2020
In Investment Research, Blog Archives

Many of us might have come across the term ‘pitchbook’ at least once while talking about investment banks or maybe while going through an investment bank’s services or on any other such occasions. While we might have an idea about what a pitchbook is, this article intends to give a full-fledged understanding of: 

$ What is a pitchbook? 

$ What does it contain? 

$ How is it created? 

$ Types of pitchbook 

So, quickly let’s dive in to acquaint ourselves with a pitchbook.  

What is pitchbook? 

Pitchbook is simply a sales book that is used by investment bankers to sell products, services, and also pitch to potential clients. The key objective of a pitch book is to provide a synopsis about a firm. It includes historical information, financial strength, available services, etc. about the firm to help investment bankers secure deals with potential clients. 

An Inside Look at Investment Banking’s pitchbook 

In general, a pitch book is divided into 5 sections: 

Source: https://corporatefinanceinstitute.com/assets/pitchbook-1200×673.png

  1. Market Update – Provides charts on the current financial market status. This is the part of the pitchbook which covers topics aimed towards convincing clients that now is the right time to make the deal. 
  2. Credentials – Numerous biographies and league tables that show why the current bank is the right choice. 
  3. Deal Outline – Gives a sense of what the deal would involve. It also provides other options to consider.   
  4. Considerations – Holds charts and tables exhibiting effects on EPS and any other potential problems. Bear in mind to read the footnotes in this section as potential problems are normally referred to as “execution” or “management”. 
  5. Appendix Though the epilogue, this is a very important section as it comprises the current as well as future models and their effects.  

How a pitch book is created? 

The pitch book creation typically involves senior managers, mainly, the managing director and VP. First, these senior managers draw the outline of the pitch book attributed to a financial solution that the client is seeking. The outline is then passed to the associates and analysts for analysis. 

The critical part is to ensure that recent industry data is used to prepare the pitch book. This is imperative not only to persuade the client but also beat the competition in the industry. The pitch book usually goes through several iterations to achieve perfection. 

Types of pitch book 

General PitchBook 

The general pitch book contains a general overview of the firm along with other important information like previous successful investments, latest market trends, current deals, and profit details. It also provides information like key executives, services provided, company size, global presence, corporate history, main competitors, market position, and performance of the organization. 

Deal PitchBook 

The deal pitch book provides information about specific deals, mainly focusing on how the investment firm can deliver services that meet the client’s financial requirement. It includes graphs that exhibit market rates, trends, overview, and valuation summary of the firm. Apart from graphs, it also provides a brief sketch of how the offering will profit the potential client.  

Source: https://corporatefinanceinstitute.com/assets/investment-banking-768×438.jpg

Management Presentations 

Management presentations consist of information about the client’s company, its financial ratios, investment needs, and particulars about projects that require funding. The key goal of management presentations is to pitch potential investors after the company gains a deal with potential clients. Specific details include products and services provided by the client, key executives of the company, market overview, financial performance history, and future room for improvement. To make the management presentations contextual and provide essential details about the company as much as possible, investment banks generally work directly with the clients. 

Sell-side M&A Pitchbooks 

Sell-side M&A pitchbooks are created when a client reaches out to an investment bank in search of potential buyers (the client may be looking to sell a section or department of the business or seeking a potential partner). This is the most popular among investment banks and is primarily used to convince the client ‘Why they should prefer the investment bank to cater to the transaction.’  

Hope this article helped you actually understand ‘What a pitchbook is in Investment Banking!’  

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Jency Durairaj
Jency Durairaj
About the Author

JENCY is a content writer with SG Analytics. She loves reading and spreading knowledge about various topics through her writing skills. Her hobbies include trekking and traveling.

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