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.
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Equity Capital Markets – ECM Memo Example
Date: [insert date of memo]
To: [insert names of members of ECM Deals Committee]
From: [insert names of members of Investment Banking Team]
Cc: [insert appropriate names]
Re: ECM Deals Committee Meeting – [insert name of issuer/details of offering] Meeting [insert date, time and location of meeting and conference call details] Details:
- Why are we meeting?
- What proposed resolutions do we want achieve?
- Is this a Prospectus Offering or a Private Placement?
- Is this an IPO or a follow-on offering?
- Is it a treasury offering or a secondary offering?
- Size of issue and type of security (Long Form/Short Form eligible)
- Geographic distribution objectives
- Retail and Institutional distribution objectives
- Syndicate structuring objectives
Use of Proceeds:
- Rationale for the issue and how proceeds will be used.
- Issuer’s history with our bank/other dealers
Business of the Company:
- Brief description of issuer’s business
- Brief summary of any recent material developments affecting the issuer and its industry
- [owner] holds[•]%
- Institutional holdings list from Bloomberg
Pro Forma Dilution:
- [number of shares in issue divided by the total outstanding after issue]
- Listed on [ exchanges]
- LTM volume of [number] of shares
- Liquidity measure [LTM trading volume divided by number of shares in issue]
- Recent blocks: [major blocks in recent months]
- [date] [number] @ [price] [dealer]
Relationships with our bank:
- Trading summary for 3 months and 1 year
- Is our bank a lender to the issuer? Is the credit agreement in good standing?
- Is our bank a shareholder of the issue? What was the price and timing of the last investment?
Research Coverage Research Comments:
- Firms providing Research coverage
- Our bank’s research recommendation and target price
- Our bank’s earnings estimates
- Other analysts’ recommendations and target prices
- IBES earnings estimates
Historical Financial Information:
- Five year financial highlights (if not included in other attached documents)
- Amount of long-term debt
- Dividend amount
- Frequency of payments (annual/semi-annual/quarterly)
- Next ex-dividend date
- Any recent changes in dividends or expected changes
- Primary and secondary valuation criteria
- Pricing relative to comparables
- Issuer’s market cap and enterprise value
- Recent share price: [price] [52-week high] [52-week low]
- One year daily and five-year weekly share price graph from Bloomberg
Most Recent Issue:
- Type of security
- The number of securities issued
- Discussion of actual market receptivity/success of offering
Risks and Risk Factors:
- Market Receptivity/depth
- Valuation benchmarks/comparables
Knowing how to build an ECM Memo is an important investment banking skill-set.
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