Any Tips for IC Memos
Done an LBO, and have a 10 page IC Memo to complete for a third round of an interview process (I have been given a week so they’re expecting DETAIL). Any suggestions for resources on this OTHER THAN CHAT GPT, what tips would you recommend for the analysis? Anything PE experts think are important to include, & any most common mistakes you see Asso’s making when prepping IC materials?
sure pm me
sure d.m me
Bump - anyone with advice & not selling something.....?
what are they selling you lol
Re "what should I include...." this is not a question for a public forum!!! The material that goes into those memos and the format that they're in is usually a bit idiosyncratic based on how your firm's IC operates. I would highly recommend looking through old memos from prior deals at your firm. Also shame on your seniors for giving you so little direction.
In terms of most common mistakes: the memo should have a narrative through-line and flow. A lot of associates just dump a bunch of analysis on the page. Every data-centric slide should have a clear and obvious key takeaway (I personally like to just see that in the title), and every merit/risk that's core to your thesis should be explored in there.
Sorry this is completely my fault, a third round OF AN INTERVIEW PROCESS (i've been asked to mock an IC memo), not an actual third round of IC, so I have no precedents (as in M&A).
Again, sorry, It was very late when I was writing this.
IMO for a case study, something like this:
Exec Sum 1-2 pages
Company Overview 1-2 pages
Investment Highlights 3-4 pages
Risks & Mitigants 1-2 pages
LBO / Model Summary 2-3 pages
Awesome! two questions: mind providing further detail about the IH slides? and what should go in the LBO / Model summary? (I can only think of a snip of the CFs + IRR/MOIC sensitivities + model key drivers but ntot much else?) Thanks!
For the 2-3 page lbo/model, unless you’re interviewing for a highly value oriented/turnaround shop in which case the CFS is important I’d definitely have a page with a base case p&l that goes from rev to ebitda as well as a couple memos on key cf figures (ie capex). Personally I’d skip the base case / downside case and you can slide that into appendix
Truth be told aside from the ultimate x% IRR and x MOIC noone really cares about the lbo math but they will drill into your p&l and key revenue / cost drivers to better understand how you think. Therefore, id create a deck that has the p&l as well as key commentary on the side
Be clear and concise.
Deliver an actionable conclusion.
Exec sum: situation overview, txn overview, company overview, investment thesis, risks, conclusion. Keep this very tight. Every song section about can be addressed in 2-4 bullets each.
The rest is just a build out from there.
Have an exhibit on valuation, have a page on thesis and be sure to highlight possible angles that particular firm may have, model output and return sensitivies.
Re: model, jr folks usually over estimate the model in the investment process. It should be tight and dynamic. You should have the business judgement to have zeroed in on the key drivers of this particular investment and be able to sensitize around it.
With the exception of deep value shops, valuation should never be the key driver of an investment.
Stick to the 10 page guidance. Don’t think more is better and deliver a 25 page deck. Fine to include an appendix if you want, but that is if you’ve already had time to master/nail the core 10 pages. There’s an old adage: I wrote you a long letter, because I didn’t have time to write you a short one. Keep it tight.
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