Pitchbooks - Overview, Structure and Uses

Published on 01 Aug, 2017

A pitchbook is a sales document created by an advisor or an investment bank to sell a part or whole of a business or a specific deal, and generate new clients. The objective is to package and sell the attributes of a firm or a specific credit in such a way so as to lure potential clients into buying the opportunity.
Given the significance of pitchbooks, they should be both informative yet sleek to trigger the desired interest. Hence, companies hire professionals to give their pitchbooks the professional spin. 

Majority of pitchbooks follow a set structure. They define a situation or current state, for example, a company looking for growth; a complication or a problem, for instance, if the client is going through a downturn; or a solution such as meeting the client’s need for growth.

Pitchbooks, largely segregated by end-use, are created for:

  • Sell-side mandates (convincing a company to sell itself) – Prepared for companies keen on presenting themselves to potential buyers for acquisition; may profile potential buyers, give recommendations and lay out the bank’s expertise and experience
  • Buy-side mandates (convincing a company to acquire another business) – Prepared for a company or a prospective client looking for inorganic growth and interested in acquiring a new business; contains target profiles suitable for the buying company based on its profile
  • Financing mandates (raising debt or equity) – Also known as deal pitchbook, is prepared for specific deals such as IPOs, raising capital from bonds and loans, refinancing activities, or any other type of credit sale; unlike the above two, there are no buyer or target profiles involved in a deal pitchbook; rather, snapshots of the financial model in addition to valuation summary are included

Apart from these specific presentations, a pitchbook is also used to prepare other information decks such as:

  • Confidential information memorandum – Shared with investors interested in the deal
  • Roadshow presentation – Highly useful when companies are on the road presenting their credit
  • Fairness opinion – An opinion given by banks on the reasonability of the price or the valuation offered in a transaction (M&A); are typically issued when there is a management or a leverage buy-out taking place, a public company is on sale, bankruptcy is filed or in the case of a hostile takeover
  • Market update – A periodic presentation sent out by banks to stay on top of the minds of potential clients; provides a generic update on market conditions, investor sentiment, M&A activity, primary issuances and performance in the secondary market
  • Management/investor presentation – A presentation for potential investors prepared jointly by banks and the client’s management team

A typical pitchbook has sections on the merits of transaction, pricing and valuation information, profiling and analysis of potential buyers and sellers and sometimes key risks and mitigates. These are:

  • Introduction and credentials of the investment bank/advisor: Investment banks usually start the pitches with their credentials and execution experience that include the bank’s platform, deal tombstones, ranking in league tables, biographies of team members, reasons why they are the best people for the job and their capability to execute such a deal.
  • Investment highlights – This usually has the key financing considerations of the credit and strengths of the prospect.
  • Company information – This gives an overview of the company with important details such as ownership structure, products and services offered, history, management team profile and business model.
  • Financial performance and analysis – A company’s historical and projected financials are included in this section of the deck.
  • Industry overview – This section contains size of the market, trends and drivers in the industry and competitive landscape. It is important to lay out this information as the buyers are not just interested in the company but also the industry that they are investing in.
  • Valuation – The company’s valuation and the methods used to arrive at are covered under this section. It generally involves relative valuation, discounted cash flows and also a blended valuation. It also contains football field valuation charts, and lists comparable trading companies and precedent transactions used to arrive at a relative valuation.

Given the significance of pitchbooks, they should be both informative yet sleek to trigger the desired interest. Hence, companies hire professionals to give their pitchbooks the professional spin.

Aranca has expertise in creating pitchbooks for investment banks and their clients across sectors and geographies. The Investment Research team at Aranca has qualified experts with relevant experience, supported by access to various databases such as Capital IQ, Pitchbook and EMIS, that enables it to develop the right pitchbook. Not only has it supported banks on buy-side and sell-side mandates but also has a large repository of specific financing-related pitch decks, illustrating its depth of coverage and expertise.