Pitching a sell-side M&A deal

How does the pitching process in a sell-side M&A deal work? Most CEOs/CFOs/Chairmen envision building an empire and becoming even more entrenched, not selling and losing their job.

Do banks wait for initial interest from companies that indicate they may be interested in selling? Just trying to get a better understanding of how the process works.

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Comments (28)

Sep 21, 2012 - 9:10am

if they own enough of the company a >$30mm payout is much better than "building an empire"... And based on my experience most executives are itching to get into something new, invest in something different, etc.

Sep 21, 2012 - 11:23am
oR3DL1N3o:
if they own enough of the company a >$30mm payout is much better than "building an empire"... And based on my experience most executives are itching to get into something new, invest in something different, etc.

So most senior executive are at least open to discussing the idea of cashing out and moving on? I am on the public equity side and I see many senior executive that are heavily against the idea of being acquired, so even with the big payout that comes from a sale, it is surprising that so many would be willing to discuss putting their company up for bid.

Do MDs typically know which companies under coverage would be willing to listen to the right deal, which ones are looking to exit, and which ones would fight any type of acquisition?

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Sep 22, 2012 - 1:54pm

Pitch for an IPO (Originally Posted: 03/19/2010)

Hi Guys,

I am trying to understand few things here. When a group of Investment banks are short listed to take a retail (for example) company public and are invited for a pitch for IPO offering.
I guess all the banks are trying show that they can raise more money and higher valuation for this retail private company? Does that mean all these banks are given data such as financial statements and company projection from the client for the pitch? So they can determine the price and offering.
Are the banks even paid to do this IPO pitch since its soo time consuming? How would one bank would differ from each other? What kind of things they mention in the pitch to show off?
Is there a pitch IPO pitch I can see which makes me understand the IPO pitching concept?

All your input is really appreciated and sorry for some basic questions.

Thanks

Sep 22, 2012 - 1:55pm

From the perspective of a PE shop looking for an IPO exit, the IB IPO pitch is generally useless as more often than not PE shops have preferred bankers and or the Portco company will go with the bank that has been most helpful during the run as a private company (i.e. most competitive on debt pricing, most receptive to modifications, etc.).

With that said, PE shops differ on the level of information they are willing to provide during a pitch but financials are fairly standard so banks can build there hockey stick graphs and compare to industry peers.

Banks are not paid to pitch, that is why IB is miserable (a ton of work, throwing a lot of shit at the wall and hoping something sticks).

All the banks will tout their highly ranked industry analysts, manipulate league tables to show that they are the best at X types of deals, show how the cap markets desk would best be able to drive demand and offer the highest price, etc.

Its unlikely that anyone will send you a CIM or example of an IPO pitch as its generally against company policy but as an example, the deck would be arranged as follows:

Background information on the bank
League tables
More league tables with examples of recent deals that have been done
Preliminary financial projections
Various valuations based on those projections (i.e. DCF, prec transactions, peer comps)

The conversation will entail a whole lot of dck sucking as well

Sep 22, 2012 - 1:56pm

Thanks for the input

I understand no one will share an example ... but im trying to understand whats a good pitch and not good pitch..

How many slides does pitch usually have.. and how detailed does the valuation .. since the company would be only giving financial statments.. not complete assumptions from its planning?

Thanks,

Sep 22, 2012 - 1:57pm

I am interested in a pitchbook from the PE's perspective trying to exit through an IPO to Ibank.
So if I were the PE or the CEO of the private company how would I pitch to a kickass specialized Ibanker ?

Sep 22, 2012 - 1:59pm

Pitch Books - Basic breakdown (Originally Posted: 05/25/2011)

Hi everyone,

I know this may sound like a dumb question, but what exactly is a basic breakdown of what would go into a pitchbook?

Also, is there a preliminary pitchbook used to win the deal and then new one(s) as the bankers learn more etc?

Thanks!

Sep 22, 2012 - 2:01pm

Pitch Book Prep (Originally Posted: 02/08/2007)

Is there an resource that people can access before they start at an I Bank to get familiar with Pitch Books? I would like to see some sample ones so I will be accustomed to what I am dealing with. Thanks.

Sep 22, 2012 - 2:04pm

What does "pitching" involve? (Originally Posted: 07/27/2009)

Is it just making a ppt and presenting it to clients? I've read some comments about junior people "pitching" when deal flow is bad, but I thought most of the client interaction came from MDs?

I guess that brings me to another question: how often to analyst interact with clients and what do the interactions involve?

Sep 22, 2012 - 2:05pm

Not sure about other places, but where I am the junior people make the PPT, get senior people feedback, go back and forth, hand it off to the senior people either the day of or the night before the pitch...then start the whole process again! Zero client interaction.

Sep 22, 2012 - 2:07pm
tuaj:
Not sure about other places, but where I am the junior people make the PPT, get senior people feedback, go back and forth, hand it off to the senior people either the day of or the night before the pitch...then start the whole process again! Zero client interaction.

Same process only I am allowed to sit in on the meetings, and answer questions if asked. I am also lucky enough to carry the pitch books to the meeting.....

Sep 22, 2012 - 2:09pm

I put up an article on this topic on my site - it pretty much articulates the same points others have already made. It is a long, drawn out, back and forth process that inevitably leads to something that many senior bankers only spend 10 minutes on, covering 3 of the 60 slides, and then go off and tangents the rest of the time - perhaps peppering a reference to a chart here and there (exaggerated, a bit, fabricated, absolutely not).

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Sep 22, 2012 - 2:10pm

How much work goes into a pitch (Originally Posted: 05/12/2010)

I would assume that there are generally two different kind of pitches
- Trying to sell company on idea for a deal > Pitch would have to include research on industry + why investment bank is great in this industry
- pitching the bank for a deal in a beauty pageant > Basically just needs to include why investment bank is great in this industry

How much work especially from the analyst side goes into these pitches? Does research/editing a pitch typically keep one up until 4am or are nightshifts more related to live deals and most of the stuff in pitches is recycled material from some old pitch?

Thx!

Sep 22, 2012 - 2:12pm
Djalminha:
How long is a piece of string?

What a valuable contribution, hats off to you.

It depends on the nature of the pitch, the nature of the deal and the nature of the relationship.

For example, in some cases a pitch is just a formality. The relationships have already signaled that you've unofficially got the mandate but you still need to do a pitch. So it will likely just be a this is who we are, this is what we do, this is what we've done, this is what we think is the opportunities for you. Its basically just alot of cutting and pasting from past pitch books, deal diaries and company bios.

In other cases its a tooth and nail battle, in which case it will be all of the above. And depending on the type/nature of the deal, it could involve a lot more analysis and work. It also depends on the level of information available to you at the time of the pitch... in addition to the complexity of the deal. A more complex industry/deal will generally speaking, dictate less in depth analysis considering the deal is much more complicated and you can't wrap your arms around it in 36 hours. In which case, the pitch would focus more about how great and active your bank is in doing deals of this nature and the current market landscape .... as opposed to digging into the nitty gritty details of that deal in particular.

Array
Sep 22, 2012 - 2:13pm

Thanks Marcus, great post! Maybe I should also rephrase my question a little: How many percent of the times you are in the office past 11pm is it because your working to finish a pitch and how often because your working on a deal.
Thx!

Sep 22, 2012 - 2:14pm

This varies as well. It depends on what group you are in. In leveraged finance, you could be working on a bank or bond pitch that is a follow on from one you worked on for a previous offering. in this case, the industry material will come from the industry groups, and you will put in cap tables, a debt maturity schedule, covenants, and relevant statistics into the pitch, before sending it out. There are also pitches for ratings agencies that take longer to put together.

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