If you’ve been reading this site awhile, you’ve seen a number of references to pitch books – whether they’re in day-in-the-life accounts, explanations of what bankers actually do, or even horror stories from other sources.
But there hasn’t been much detail on what goes into pitch books, why you spend so much time on them, where you can get some samples, and how you can learn to make them.
So let’s get started.
Types of Pitch Books
People use the term “pitch book” for almost any type of PowerPoint presentation that you create in investment banking.
But this is too broad for our purposes, so I’m going to split “pitch books” into the 3 main types of presentations you create:
- Market Overviews / Bank Introductions – Introducing your bank and giving updates to potential clients.
- Deal Pitches – Sell-side M&A, buy-side M&A, IPOs, debt issuances, and so on.
- Management Presentations – Pitching a client to investors once you’ve actually won the client.
There are other types and sub-types, but 99% of your work in PowerPoint falls into one of these 3 categories.
These 3 main variants have a few common elements:
- Title Slide with the date, bank or client logo, and description of the presentation.
- Table of Contents listing the different sections right after the Title Slide.
- Slides with bulleted text and slides with graphs / diagrams.
There are no fancy transitions, animations, 3d effects, or anything else: pitch books are printed out 99% of the time, so none of that makes sense.
The length varies widely – some presentations might be 10 pages and others might be 150 pages depending on the category, where you’re working, and how much your MD wants you to suffer.
Market Overviews / Bank Introductions
This is the simplest type of pitch book – it’s usually around 10-20 slides that introduce your bank and give an overview of recent market activity to “prove” that your bank knows what it’s talking about.
1. Slides showing your bank’s organization, the different departments, and how “global” you are.
2. Several “tombstone” slides that show recent deals your bank has done in a particular sector. So if you’re presenting to Exxon Mobil, you might show recent energy M&A deals, IPOs, and debt offerings you have advised on.
Along with these, you might create “league table” slides that show how your bank ranks in different areas like tech M&A deals, equity issuances, and so on.
3. “Market overview” slides showing recent trends and deals in the market and data on how similar companies (“comps”) have been performing lately.
These types of pitch books are the least painful for investment banking analysts because you mostly just copy slides from elsewhere and update existing data.
Some banks don’t even use these types of presentations at all – they’re more common at smaller banks where you actually need to introduce yourself.
Sell-Side M&A Pitch Books
Here’s where the fun begins. These pitch books are the longest and most complex, and can sometimes be well over 100 slides.
You create these when a company says, “We want to sell, and we’re holding a bake-off to select a bank to represent us. You get to play – create a presentation and then pitch us on why we should choose you.”
The usual contents:
1. Bank Overview
This is similar to #1 and #2 above, but there’s more of an emphasis on cutting data in creative ways to make your bank look better than it actually is.
“We’re not #1 in energy deals over $1 billion? Try $1.5 billion… try North America only… try between $750 million and $1.5 billion!”
2. Situation / Positioning Overview
Here’s where you create a few textual slides on what makes the company attractive and how you would pitch it to potential buyers.
You might also create graphs showing how quickly the market is growing and how this company dominates the competition, even if it doesn’t.
3. Valuation Summary
This is where you exaggerate the company’s value and make bold promises so that your bank can win the deal.
You start off with a textual summary, then present the infamous “football field” graph showing the company’s valuation according to different methodologies.
Then you show individual methodologies such as public comps, precedent transactions, and a DCF.
Senior bankers usually know how much a company is worth, so they give you a number and you have to work backward to make the data support it.
Yet another reason why banking is not rocket science.
4. Potential Buyers
This is where you give an exhaustive list of everyone who could potentially buy this company.
You might split this into strategic acquirers (normal companies) and financial sponsors (PE firms and hedge funds), and you include a summary slide in the beginning followed by detailed descriptions (“company profiles”) afterward.
This can easily be the most painful section of the entire pitch book.
Imagine looking up a company’s business description, products, executives, and financial information and pasting all of that into PowerPoint… now repeat that 20 times.
5. Summary / Recommendations
You give advice and recommend how many buyers the company should approach, how long it will take, and what your bank is going to do in this section.
These are almost always templated slides taken from other presentations, so this part isn’t too painful.
This contains all the data that no one reads.
You might paste more detailed models, backup data, and even lengthier lists of company profiles into this section.
Bankers like to make presentations as long as possible so thick appendices are very common.
Buy-Side M&A Pitch Books
These are similar to sell-side M&A pitch books, so I won’t repeat everything – the key differences:
- They’re shorter because not as much data is stuffed into the appendix.
- Rather than listing potential buyers, you list potential acquisition candidates – this list may be much longer and you may create more profiles for these companies.
- There’s not as much information on the company’s own valuation – you’re buying another company, not being sold.
Despite being shorter, buy-side pitch books may be more annoying because you have more time-consuming company profiles.
Debt Financing or IPO Pitch Books
These are both similar to the sell-side and buy-side pitch books above. The differences:
- There are no company profiles and no potential buyers / potential acquisitions sections.
- You include relevant financing models – for example, an IPO model showing what multiple a company might go public at and how much in proceeds it will receive.
With no company profiles, these presentations are somewhat less painful than M&A pitch books.
These pitch books – created for real clients instead of prospective clients – are less quantitative and are more focused on the client’s strengths.
You’re pitching the company itself to investors (for debt / equity offerings) or to potential buyers (for sell-side M&A) so you use the client’s colors and presentation theme rather than your bank’s.
The structure depends on the client’s industry – a management presentation for a bank will look much different than a presentation for a tech company.
If we assume that the company is a “standard” one selling products or services to customers, a typical structure might be:
- Executive Summary / Company Highlights
- Market Overview
- Products & Services
- Sales & Marketing
- Expansion Opportunities
- Org Chart
- Historical & Projected Financial Performance
You never use company profiles, information about your own bank, information on other companies (e.g. showing the comps), or valuation data in these presentations.
You still use a mix of bulleted text slides and graph/diagram slides, but it’s harder to generalize the exact slides you might see.
Common slide types: Bar graph showing the total addressable market each year; graphical display of all the company’s products; customers by geography, industry, and size; historical and projected income statements and the most recent balance sheet.
For asset-heavy industries like financial institutions and oil & gas, it doesn’t make sense to discuss “products” or “customers” so you would instead give more detail on their assets, proven and unproven reserves, and so on.
Management Presentations are less repetitive to create than other types of pitch books, but they also take more time to complete.
You might throw together a sell-side M&A pitch book in a few days, but management presentations often take weeks.
That’s not because they’re longer – most of the time they’re actually shorter, in the 30-50 slide range.
Instead, they take more time because you need to interact with the client, get their feedback, and go through more iterations.
The US tends to have the lengthiest pitch books – bankers there like to do work for the sake of doing work.
In emerging markets, such as investment banking in Saudi Arabia, pitch books tend to be simpler and less focused on numbers.
English is the predominant language used in pitch books, but sometimes you see local languages depending on the market – the best example is Japan, where you pretty much need to know the language or you can’t do anything.
Other Types of Pitch Books
There are a couple other types of pitch books and sub-types of the ones described above:
1) Combo Pitch Book / Scenario Analysis
A company isn’t sure whether it wants to go public or sell – so you create a pitch book with both scenarios and show the tradeoffs.
You might also do this if you’re pitching a restructuring deal and you want to show what happens if the company sells vs. declares bankruptcy vs. restructures itself vs. refinances its debt.
2) “Targeted Deal” Pitch Book
A buyer has just approached your client with an acquisition offer and you want to show accretion / dilution under different scenarios.
In this case you would skip all the upfront materials about your bank and just get into business, showing mostly numbers from your analysis.
3) “Client Update” Presentations
You create these if you’re running an M&A deal and you want to update the client on your progress.
You would skip all the fluff and just create a few slides showing who you’ve contacted, what they’ve said, and a summary of any offers received so far.
4) Fairness Opinions
You do these right before a deal is officially announced – they consist of detailed valuations that prove the price your client is receiving (or paying) is “fair.”
Again, you skip all the fluff and get straight into business with a few slides that summarize the offer terms and then a whole lot of slides with valuation graphs and data.
Differences at Boutiques vs. Bulge Brackets
Pitch books are similar no matter what bank you’re at, but there can be a few differences:
- Bulge brackets tend to be more numbers-focused while smaller places may be more qualitative and market-focused.
- Bulge brackets often show more scenarios than boutiques and therefore have lengthier pitch books.
In Other Areas of Finance
Sometimes you see similar types of presentations in private equity, hedge funds, and asset management.
But these presentations are shorter and have less fluff compared to investment banking pitch books.
Some buy-side firms like to make analysts and associates create “investment memos” that summarize everything for the Partners before they make an investment decision.
These look similar to the Management Presentations described above – whether or not you do them depends on your firm’s culture.
Why Do You Spend So Much Time On Them?
You never create pitch books from scratch – you’re always working off of templates and pasting in data from other sources.
So that raises the question – “If pitch books aren’t rocket science, why do you spend so much time on them?”
Much of this goes back to why bankers work so much – so let’s go through the reasons.
You will spend a lot of time making sure that everything is properly footnoted, that all your sentences end with periods, and that the employee counts for all 50 of your company profiles are 100% correct.
If you’ve read Monkey Business, you already know about this one: yup, nothing has changed in 20+ years.
When you distribute your pitch book, the Associate will make one set of changes, the VP will make another, and the MD will make another – which results in conflicts on every single slide.
You will also spend a lot of time receiving marked-up pitch book faxes at 3 AM and then implementing all the changes.
Dozens of Revisions
It’s not uncommon to see “v73″ and other large numbers at the end of each file name – sometimes you go through over 100 revisions of a single pitch book.
These have diminishing returns after the first few major changes, but bankers follow the 20/80 rule instead of the 80/20 rule.
You’ll also spend a lot of time trying to decipher what your VP meant when you can’t read anything he marked up in red pen on your latest draft.
Inefficiencies & Pride
It’s one thing if a senior banker wants to sketch out a new graph for you to create, but often they re-write the text of entire slides on the printouts of those slides.
That alone takes longer than re-typing it in the first place, but then it also costs you time because you have to read their markup, interpret it, and type it all over yourself.
Why? Because senior bankers are “above” editing PowerPoint files directly.
Finally, bankers have irrational obsessions: if you’re not murdering people in your bathtub, you’re changing minutiae in a pitch book instead.
When you’re pitching a company, relationships and the actual in-person pitch matter far more than the presentation - but rather than focusing on those, bankers like to spend time on tasks they feel more comfortable with, like changing font sizes in a presentation.
Where Can You Get Example Pitch Books?
They’re quite tough to come by – leaked pitch books are easy to trace back to whoever leaked them because they include bank logos and specific company names.
So it’s far more difficult to get sample pitch books than it is to find sample Excel models.
Still, you can find a few if you scour the Internet:
- NASDAQ OMX & ICE Proposal to Acquire NYSE Euronext
- Leaked UBS “Market Overview” / “Bank Introduction” Pitch Book
- Leaked Bear Stearns Presentation to Nortel / Avaya
- Credit Suisse Fairness Opinion on SunGard LBO – Public Record
- Wells Fargo Securities Investment Banking & Capital Markets
- Raymond James Introductory Presentation
- Morgan Stanley Real Estate
- Morgan Stanley International: European Overview Update
- Time Warner – The Lazard Report
While some of these are quite old, bankers are creatures of habit and pitch books barely change from year to year so they’re still accurate.
These tutorials walk you through the process of creating a buy-side M&A pitch book – and there’s also a more targeted pitch book for the Microsoft / Yahoo deal in the Advanced Modeling tutorials.
These aren’t 100% representative of what you’d see at a bank because they skip over the “bank introduction” section – but you don’t do much original work there as an analyst anyway.
What Do You Do With Them?
Before you start working in banking, you should get familiar with the layout of these different types of pitch books and try to learn some PowerPoint basics.
Don’t go crazy with it because a lot of the process depends on your bank, but it’s always good to know the structure and how to arrange slides, text, and objects before you start working.
More questions? Ask away.