writing-investment-committee-memos

# Writing Investment Committee Memos ## When To Use - Preparing a new deal for IC presentation (initial screening or final approval stage) - Documenting a follow-on investment decision for an existing portfolio company - Writing up a co-investment opportunity for LP or partner review - Summarizing a deal that was passed on, for institutional memory - Presenting a portfolio company add-on acquisition or recapitalization proposal ## Inputs To Gather - **Company overview**: Name, sector, geography, founding year, business model description - **Deal parameters**: Transaction type (buyout, growth equity, venture, co-invest), proposed valuation, enterprise value, equity check size, expected ownership percentage, capital structure (debt/equity split) - **Financial data**: Historical revenue, EBITDA, and margin trends (minimum 3 years); projected financials with stated assumptions; working capital and capex requirements - **Deal sourcing context**: How the deal originated (proprietary, auction, intermediary), competitive dynamics, timeline and exclusivity status - **Management and governance**: Key management bios, retention/rollover terms, board composition post-close - **Due diligence status**: Completed workstreams (commercial, financial, legal, tax, environmental), open items and red flags - **Comparable transactions**: Relevant precedent deals with entry multiples and outcomes - **Return analysis**: Base, upside, and downside case IRR/MOIC projections with key drivers and sensitivities - **Risk factors**: Identified risks ranked by likelihood and severity, with proposed mitigants - **ESG considerations**: Material ESG factors, if applicable to the fund's mandate ## Workflow 1. **Confirm memo stage and format** — Determine whether this is a screening memo (2–4 pages, high-level thesis and key risks) or a full IC memo (8–15 pages, comprehensive analysis). Confirm the fund's standard template and section ordering if one exists. 2. **Draft the Executive Summary** — Lead with the investment recommendation (approve/decline/table for further diligence). State the deal thesis in 2–3 sentences: why this asset, why now, why this price. Include headline deal terms (EV, entry multiple, equity check, target return). 3. **Write the Company and Market Overview** — Describe what the company does, its competitive positioning, and the end-market dynamics. Quantify the total addressable market. Identify secular tailwinds or headwinds. Keep this section factual; save the interpretive lens for the thesis section. 4. **Articulate the Investment Thesis** — Present 3–5 discrete value-creation levers (e.g., organic revenue growth, margin expansion via operational improvements, M&A-driven multiple expansion, working capital optimization). Each lever should have a quantified impact tied to the financial model. 5. **Present the Financial Analysis** — Summarize historical performance, the management case, and the sponsor case. Include an LBO or returns waterfall showing the path to target IRR/MOIC. Present sensitivity tables on entry multiple, exit multiple, revenue growth, and margin assumptions. Flag any hockey-stick projections with [VERIFY] tags. 6. **Detail the Risk Assessment** — Organize risks into categories: market/cyclicality, customer concentration, management/key-person, regulatory, financial leverage, and execution. For each risk, state the mitigant or the monitoring mechanism. Rank risks as High / Medium / Low impact. 7. **Summarize Due Diligence Findings** — Report key findings by workstream. Highlight confirmatory findings that support the thesis and any findings that challenge it. List open diligence items with expected completion dates. 8. **Include Comparable Transactions and Public Comps** — Provide a table of 5–10 precedent transactions with date, EV, EV/EBITDA, and EV/Revenue multiples. If public comparables exist, include current trading multiples. Note where the proposed entry valuation sits relative to these benchmarks. 9. **State the Recommendation and Proposed Terms** — Restate the recommendation. Outline proposed deal structure, governance rights, key protective provisions, and any conditions to closing. Specify the approval being requested (e.g., authorization to submit a binding offer at up to $X EV). ## Output The final IC memo should contain these sections in order: - Executive Summary with recommendation - Company and Market Overview - Investment Thesis and Value Creation Plan - Historical and Projected Financial Summary (with tables) - Returns Analysis (base / upside / downside cases) - Risk Assessment Matrix - Due Diligence Summary and Open Items - Comparable Transactions Table - Recommendation and Proposed Terms - Appendices (org chart, detailed financial model outputs, key contract summaries) as needed Format as a professional document with numbered pages, consistent heading hierarchy, and source citations for market data and comparable transactions. ## Quality Checks - Every financial figure ties back to a named source (management data room, third-party report, public filing) — no orphaned numbers - Return scenarios include at least three cases with clearly stated differing assumptions - Risk section contains a mitigant for every High-impact risk; no risk left as "to be determined" - Entry valuation is benchmarked against at least one set of comparables - All projections extending beyond 2 years from the most recent actuals are tagged [VERIFY] if not supported by contracted revenue or backlog - Deal terms section specifies the exact approval being requested from the IC - Memo length matches the stage: screening memos do not exceed 4 pages; full IC memos target 8–15 pages - No confidential information from other deals or portfolio companies is inadvertently included