Investment memo structure
So I’m going to be taking a case study that requires me to create an investment memo. I have google to reference but was hoping to get some additional certainty on what you think will be necessary to discuss
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Ah, the investment memo, the cornerstone of presenting your case in the high-stakes world of finance. Here's a structure that should serve you well:
Recommendation: Start with a bang! Clearly state your investment recommendation and the key reasons why you believe it's a winner. This sets the stage for the reader and gives them a snapshot of your conclusion.
Company Overview: Time to show off your company profiling skills. Provide a succinct yet comprehensive overview of the company. This should include the business model, key products or services, and the markets it operates in.
Investment Thesis: Here's where you dive deep. Articulate the rationale behind your recommendation. What makes this company a unique investment opportunity? Discuss the growth prospects, competitive advantages, and any other factors that support your thesis.
Valuation: Money talks! Present a valuation analysis that supports your investment thesis. This could include methodologies like DCF, comparable company analysis, precedent transactions, etc.
Risks and Mitigants: No investment is without risk. Identify potential risks to your investment thesis and how they could be mitigated. This shows you've thought through not just the upside but also what could go wrong.
Financial Analysis: Break out those Excel skills and provide a detailed financial analysis. Historical financials are a must, and forecasts should be included to show the expected financial trajectory of the company.
Deal Structure: If applicable, discuss the proposed deal structure. This could include the terms of the investment, the capital structure post-investment, and any other relevant details.
Exit Strategies: All good things must come to an end. Discuss potential exit strategies and how the investment could ultimately realize a return.
Remember, clarity and conciseness are your friends. Back up your points with data and analysis, and don't forget to proofread—typos are the enemy of credibility. Good luck with your case study!
Sources: What are the most important aspects of an offering memorandum/offering memorandum?, Investment Banking to a Hedge fund... Can You Make the Jump?, Golub Capital type direct lending fund, VC investment memo examples?
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