What is a Term Sheet? A term sheet outlines the basic terms and conditions of an investment opportunity and is a non-binding agreement that serves as a starting point for more detailed agreements – like a commitment letter, definitive agreement (share purchase agreement), or subscription agreement. Term sheets are often produced by investment bankers on…
Why Does Warren Buffett Dislike EBITDA? Warren Buffett is well known for disliking EBITDA multiples to value a business’s financial performance. But why? EBITDA stands for “earnings before interest, taxes, depreciation, and amortization.” It is one of many indicators of a company’s financial performance; however, it excludes depreciation and amortization on the basis that they…
What is a Greensheet? A Greensheet (or Green Sheet) is a summary of the key attributes of the issuer of an offered security used by the sales force when they solicit expressions of interest from prospective institutional investors and brokers. It is an internal marketing document and cannot be shared outside of the bank. Greensheets…
What is an Equity Capital Markets ECM Deals Committee Memo? An Equity Capital Markets (ECM) Memo is generated internally at an investment bank to approve a potential transaction (IPO, follow-on offering, etc.). The ECM Memo is prepared by the investment banking team and sent to the ECM team. Download the ECM Deals Committee Memo Template…
Due Diligence Checklist Below is an example of a due diligence checklist for mergers & acquisitions, capital raising, and other transactions. The due diligence checklist includes over 25 items that range from financial to legal to operations items that should be verified before completing the transactions. Example – Due Diligence Checklist Items What is the bank’s…
What is the LTV/CAC Ratio? LTV stands for “lifetime value” per customer and CAC stands for “customer acquisition cost.” The LTV/CAC ratio compares the value of a customer over their lifetime to the cost of acquiring them. This eCommerce metric compares the value of a new customer over its lifetime relative to the cost of…
What is a Beauty Contest or Bake-Off? Prospective investment banking clients will conduct a “Beauty Contest” or “Bake-Off” as a means of interviewing several investment banks in connection with selecting a financial advisor, underwriter, or placement agent for a prospective transaction. When participating in a beauty contest or bake-off, investment bankers will show why they…
