Help with crafting an investment pitch
I have an interview with a MM PE firm coming up and the headhunter I'm working with told me that they may ask me to pitch an investment in the interview (private or public company).
I've never prepared a pitch or real thesis like this before and wanted to ask your help with how to approach this. I'm assuming a public company will be easier to do as I'd have access to financials & market data. Most of my personal investing is passive in index funds so I haven't really done this kind of research.
I imagine I should try to identify a company that is (a) within the investment criteria of the firm I'm interviewing with (size, industry); (b) is profitable and has been cashflow positive with a positive outlook; (c) may be undervalued relative to industry peers (trading at a lower EV/EBITDA or P/E ratio). I would then describe the company's product/service offerings, position in the market, potential investment risks etc.
Should I just start with a CapIQ screen of public companies in a particular industry and try to narrow down a potential target? What's the best approach to take here?
To put your mind somewhat at ease, the PE firm is trying to understand how you think rather than use this to add to their sourcing funnel.
In addition to what you outlined, i suggest trying to understand how the PE fund you are interviewing for creates value. For example, if they do a lot of buy-and-build type investments then you could try to identify an sub sector that might be interesting to consolidate. The thesis is usually the same: buy at a low multiple, arb to platform multiple on exit and realize synergies through SG&A and procurement.
So it’s less about pitching a specific company and more so about why a certain sector may be interesting to look at and mentioning a potential target in that sector?
No. It is about how you think about determining whether a specific company or not would be a good investment and the factors you'd consider, secular and cyclical industry factors being one of several points. You should be put at ease because the PE firm is not wanting a perfect, super tied up investment thesis that is actionable.
So it’s less about pitching a specific company and more so about why a certain sector may be interesting to look at and mentioning a potential target in that sector?
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