Coverage Reports & Marketing Material

The metrics that we track within our indices and the benchmarking that we perform serve the basis for further analysis in the form of sector reports that are distributed to companies in the origination process.

By demonstrating our expertise on what is happening in a given industry, we position ourselves as a go to resource for advice.

Marketing material may be distributed on a monthly or quarterly basis and can serve as a reason to have touch points with various clients.

Applying the Coverage Methodology:

The investment banker will often focus on a product group (i.e. M&A) and/or an industry (industrials, healthcare, technology). Proper coverage comes in the form of maintaining a coverage index for a sector and its sub-sectors which is broken down in the following manner:

● Industry macroeconomics

● Industry spending

● Sub-sector spending

● Stock market performance of industry

● Public sub-sector financial and valuation performance

● Sub-sector index

● Sub-sector index: financial performance

● Sub-sector index: public market multiples

● Sub-sector index by product category

● Sub-sector index by product category: financial performance

● Sub-sector index by product category: public market multiples

● Industry M&A Market Update

● Industry M&A deal volume and spending

● Industry M&A exit multiples

● Sub-sector M&A deal volume and spending

● Sub-sector M&A exit multiples

● Sub-sector M&A deal volume by product category

● Sub-sector M&A exit multiples by product category

Appendix

● Sub-sector index key metrics

● Sub-sector index key metrics by product category

● Industry most active buyers

● Sub-sector most active buyers

● Sub-sector most active buyers by product category

In the lower middle market and middle market, for each target geography (ex. Florida, New York, California, Texas) and each vertical, the investment banker is going to want to build his rolodex to a sizeable number. This means having:

● The name of the company

● Name of the CEO or owner

● Email of CEO or owner

● Phone number of CEO or owner

● Initial contact (ex. Yes, no, timeline)

The investment banker is going to want to inquire as to whether the company is open to evaluating their strategic alternatives every six months as new scenarios emerge within the coverage companies which change entry/exit dynamics (ie strategic actions).

After getting the initial contact, the investment banker can begin providing coverage to the individual company which includes providing sector and sub-sector coverage including:

● Industry macroeconomics

● Public sub-sector financial and valuation performance (public comps)

● Industry M&A market update

From this data and information the investment banker can advise on strategic alternatives including capital raising, M&A and growth advisory. Key questions include:

● Which way are multiples going?

● Whom are likely acquirers?

● What are likely multiples for the acquisition?

● What precedent transactions can we point to in order to justify a premium valuation?

Coverage Marketing Material

When maintaining coverage of an industry or sector, one prepares a newsletter to be sent to prospective sell side clients in the industry or sector. Investment bankers use the index information to create this newsletter. The newsletter is about 2 to 6 pages.

Industry or Sector Newsletter

The newsletter does not go into as much depth as a report. The newsletter can be a few pages.

Industry or Sector Report

When maintaining coverage of an industry or sector, one prepares a report to be sent to prospective sell side clients in the industry or sector. The report goes more in depth than the newsletter. The report can be about 15-20 pages.

Pitchbook

When we have built out our industry indices and began coverage, we can begin to pitch our M&A services to particular businesses to win M&A mandates. This means building a pitchbook for an individual target to model out an M&A case under different scenarios.

Rolodex Building

As an investment banker it is important to establish relationships with the strategics & financials in your coverage group as well as relationships with targets and their potential buyers. After building the index containing relevant strategics, one should go to RocketReach.co and find the email addresses for each of the CEOs, CFOs, and/or corporate M&A department head for the potential acquirer.

Vertical & Geographic Coverage

When building out your coverage for your investment bank, if your coverage begins at $5M revenues on up in manufacturing, then there should be about 1,500 firms per state.

Building the Pitchbook

As mentioned earlier, the pitchbook is an origination document meant to win sell side business for the investment bank.

There are two main types of pitchbooks that are created.

Introduction & Market Overviews

Introducing the investment bank and giving market updates to potential clients. This is origination work and is associated with then allowing you to pitch different strategic alternatives for the company.

IB structure and coverage

Relevant deals that you have worked on in the sub-sector

Market overview with recent trends and deals in the market and data on how public comps have been performing

Mandate Deal Pitches

To win sell-side M&A & buy-side M&A mandates.

Sell-side M&A Pitches:

Bank Overview

Situation / Positioning Overview

Attractiveness as an acquisition target and how it would be positioned to an acquirer:

● Growth story

● Operational improvement story

Valuation Summary

Valuation football field with range and methodologies

Potential Buyers

Likely buyers with summary:

● Strategic

● Financial

Summary & Recommendation on Process

Timeline of prospective M&A process along with the steps/deliverables

Appendix

Buy-Side M&A Pitches

Lists the potential acquisition candidates and includes profiles of the companies. Also contains short information about valuation multiples of targets.