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ECM Deals Committee

Below is an overview of what the ECM Deals Committee is.

What is the ECM Deals Committee?

The Equity Capital Markets (ECM) Deals Committee assesses the financial and business merits of any proposed New Equity Issue to determine whether a bank will become involved in the New Equity Issue. Most banks will not commit to any New Equity Issue without obtaining approval from the ECM Deals Committee.

 

ECM Deals Committee

 

ECM approval

In determining whether a bank will participate in a New Equity Issue, the ECM Deals Committee considers the financial and business merits of the transaction, the related underwriting risk, and the impact of the transaction on the bank’s franchise. To obtain approval from the ECM Deals Committee for a New Equity Issue, the Investment Banking Team will prepare and submit an ECM Deals Committee Memo to the members of the Committee for their consideration.

 

ECM deals committee meetings

The ECM Deals Committee meeting typically requires participation by the Head of Equity Capital Markets, a senior representative of Equity Sales and Trading, and a senior representative from Investment Banking who is a member of the relevant issuer’s industry group. In addition, if a representative of Research participates in the meeting, a representative of the Legal Department should also attend the meeting.

For each New Equity Issue, Equity Capital Markets creates and maintains a file containing:

  1. A copy of the Deals Committee Memorandum
  2. A list of the participants who attended the Committee meeting
  3. The Committee’s decision as to whether to participate in the New Equity Issue and, if the decision is to proceed with the New Equity Issue, a description of any conditions imposed by the Committee

 

ECM Memo

An Equity Capital Markets ECM Memorandum is an internally created document used at an investment bank to approve (or reject) a potential transaction such as an IPO, follow-on offering, etc.  The ECM Memo is prepared by the investment banking division and sent to the ECM team.

Equity Capital Markets Memo

Learn more, with CFI’s free ECM Memo Template.

 

Additional resources

Thank you for reading CFI’s guide to this ECM procedure.  To keep learning and advancing your career, these additional CFI resources will be helpful:

  • What is ECM
  • Investment Banking Division
  • Equity Research
  • Financial Modeling Resources

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