A one- or two-page document introducing a potential acquisition or investment
An investment teaser is a critical first step for a business in the capital-raising process.
The teaser is a brief and confidential document designed both to gauge interest in, and to generate interest from, potential investors or buyers of a company or its securities.
It’s used to present an investment opportunity, whether the purpose of that investment capital is to grow organically, make an acquisition, go public (via IPO), or to be acquired outright.
Potential investors can’t indicate interest in an investment opportunity without knowing something about the company; additionally, company management (and their advisory team) can’t gauge interest or make a market without divulging something about the business to prospective investors or acquirers.
But many management teams don’t want the broader public to know they’re raising capital, going public, or looking to be sold; it can impact team morale, customer relationships, and negotiation dynamics in the capital-raising process.
The central purpose of an investment teaser is to solve this “chicken-and-egg” dilemma by confidentially presenting important information about the business. This element of confidentiality is often referred to in industry as being prepared on a “no-names” basis.
The confidential investment teaser may be prepared by several different stakeholders, including:
If the company is looking to go public or offer a private placement of shares, management will enlist the services of an investment bank’s capital markets team to prepare the investment teaser.
The investment banker’s job is to both gauge interest in the company’s securities (in order to set a target price range per share), but also to stimulate interest in the opportunity, in order to have buyers lined up for blocks of shares.
Potential public stock investors that receive an investment teaser are usually asset management firms or other institutional buy-side players like hedge funds, mutual funds, or pension funds.
If management is looking to sell the company, it may enlist the services of an M&A advisory team, who will start that process with a teaser.
Like the capital markets investment banker, the M&A advisor’s job is to both gauge and generate interest in the company, in order to create competitive tension and eventually secure the most money at closing.
The most common potential buyers are financial investors like private equity firms (often called financial sponsors), as well as strategic investors, which may also receive investment teasers (regarding similar businesses in the same industry).
Depending on the life-cycle stage of the business, the management may prepare the teaser themselves.
For example, early stage, founder-led companies often look to raise capital for growth. Potential investors at this earlier stage may include angel investors, seed or growth-stage venture partners, or other venture capitalists.
The specific contents of a teaser document vary by industry and firm, but there are at least five components included in most teasers. These are:
Enter your name and email in the form below and download the free investment teaser template now!
Investment teasers should not exceed two or three pages in length, so it’s critical to be concise and only include the most important information and data points.
A picture is worth a thousand words, so using charts to convey information visually is typically encouraged. It’s also important to put a strong foot forward, so a good teaser won’t highlight metrics that might be considered weak relative to industry benchmarks.
The person preparing the teaser should know the teaser’s target market; for example, they shouldn’t shop small, seed-stage tech companies to a portfolio manager at a sovereign wealth fund whose mandate is trading blue chip, public securities.
If a prospective investor or buyer likes what they see in the teaser they may want more information to continue the due diligence process.
Typically, the investor (whether an angel investor, venture fund, private equity firm, or other buy-side asset manager) will sign a nondisclosure agreement (NDA). At which time the investment banker or the M&A advisor will distribute a Confidential Information Memorandum (sometimes called a CIM), which includes more information about the company, its financial results, and the proposed deal particulars.
If the investor is still interested after the CIM stage they may sign an exclusivity agreement in order to access the company’s data room, which is where all the company information necessary for more robust investor due diligence is located.
Thank you for reading CFI’s guide on Investment Teaser. To keep advancing your career, the additional CFI resources below will be useful:
Access and download collection of free Templates to help power your productivity and performance.
Already have an account? Log in
Take your learning and productivity to the next level with our Premium Templates.
Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.
Already have a Self-Study or Full-Immersion membership? Log in
Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.
Already have a Full-Immersion membership? Log in