An investment banking pitch book is a common term many of us might have come across while browsing the various investment banking services. A pitch book is a sales presentation that is used by investment bankers to persuade customers to buy their products and services. The main objective of a pitch book is to provide a summary of the firm and to close the deal with potential clients. A pitch book offers information on the company’s history, financial records, products and services etc. In a nutshell, a pitch book is typically an explanation of why the company is best suited for the deal (sell side or buy side) under discussion.
What Is Included In A Pitch Book?
An investment banking pitch book contains the following information:
- Title page – title, logo and date
- Table of contents
- Executive summary, explaining the outline and reason for pitching along with call to action
- Introduction of the bank and executives present at the meeting
- The bank’s track record
- Industry overview/industry trends, charts and graphs for explaining the current market situation and trends – this part is crucial as it helps in convincing the customer that now is the right time to buy the services.
- Valuation section determining the price and its impact (football field analysis).
- Valuation methods include DCF analysis, comparable company, precedent transactions and SOTP.
- Transaction strategy that the bank will resort to depending on the client’s requirement, such as IPO, business sale or partnership.
- Last but not the least, appendix, which comprises current as well as future financial models and their effects (proforma analysis).
How is a pitch book made?
The process of creating an investment banking pitch book typically involves joint efforts by junior and senior managers. The managing director or vice president outlines the pitch book related to the financial solution that the potential client is looking for. This outline is then sent to analysts or associates for a deeper look.
The pitch book is created keeping in mind the latest industry trends and data. The creation usually takes anywhere between a few days to weeks. The pitch book goes through several revisions to match the client’s requirements.
Once the pitch book is created, the managing director along with other senior members of the investment banking team delivers it at the client’s office.
Types of investment banking pitch books
Let us review various types of investment banking pitch books.
1. General pitch book
Provides an overview of the corporation and information such as past investment records, current deals, latest industry trends, profits, services provided, company size, corporate history, main competitors, company performance, previous client list and more.
2. Deal pitch book
Primarily focuses on specific deals. It mainly helps in understanding how the firm can deliver services that match the client’s requirements. This book uses charts and graphs to show market rates, valuation summary and company overview. It also explains how the offering will benefit the customer.
3. Management presentations
To pitch potential investors after the firm successfully closes the deal with the client. It usually contains information about the client’s company, its investment needs, investment highlights, positioning pages, financial ratios, project details etc. To prepare an accurate management presentation book, investment banks must directly work with clients.
4. Sell-side M&A pitch book
Most popular among investment banks, these pitch books are required when a client approaches an investment bank to find potential buyers. This can happen if the client wants to sell a section of the company or is looking for a partner. The main objective of this book is convincing the client on why this investment bank is the best choice for them to handle the task at hand. A sell-side M&A pitch book contains the list of potential buyers, successful deals of the bank and the client etc.
Wrapping things up
All in all, an investment banking pitch book plays a crucial role in the success of a deal. It provides complete and accurate information about the investment bank, based on which the client has to decide whether to engage with the bank or not.