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A pitch book is a marketing presentation (information layout) used by investment banks around the world. It consists of a careful arrangement and analysis of the investment considerations of a potential or current client, and/or a reference for comparison for an employee in an investment or commercial bank. Its purpose is to secure a deal for the investment bank with the potential client.
When an investment bank seeks new business, the starting point is the initial pitch or sales introduction. Investment banking traditionally adopts a highly formalised approach to making sales. and will follow a tailored and highly effective sales strategy. If the bank is planning to be a participant and managing member of a share offering then it will make making agreeing to firm commitment underwriting, if the investment bank is planning to act as a lesser participant, involving less commitment, then it is agreeing to either a best efforts underwriting or "standby" commitment.
Full-service investment banking conglomerates (a.k.a "Bulge Bracket" banks), will compete to win the business of an established client as either the lead or co-manager of a syndicate. If a firm is less established, the firm, and not the investment bank, will make the pitch to secure the relationship. The founders and management of the business can do this through marketing a business plan or structured private placement. (See Regulation D) of the United States Securities Act of 1933
The pitch book is indigenous to the investment bank marketing itself to its clients. It represents valuable and detailed marketing material and provides the bank with a chance to show and prove why that investment bank should be considered amongst the wide variety of financing and other sources of capital and considerations in the financial marketplace (and a pitch book will typically go beyond simple comparisons of debt and equity costs and structures).
The pitch book is not to be confused with a public information book ("PIB"), which is an internal resource for the investment bankers to glean transactional and historic information of the intended industry a particular target firm may be in or may be heading towards. The PIB is an easy to access research source, which is usually maintained in the library of an investment bank.
The pitch book may employ a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). "Comps", or Comparable Company Analysis may also be presented. In a comp, an investment bank will present industry specific details, trends, macro- and microeconomic and company specific analysis, which will not only support the investment bank's vision but also support reasoning for a particular future valuation discussion for the potential client.
There are many contributors to an investment bank's pitch book. It starts with the analyst to the associate to the vice-president and senior vice-president (relationship managers) to the lead of the team, the managing director. As an example, a table of contents or outline will open the pitch book for discussion. Name, title, and department present a management description of the deal team and other contributors within the firm’s internal wealth of resources. An "overview", "financing requirements (such as satisfying capital expenditures "CAPEX" and capital budgeting)", and finally as mentioned a description of the company's universe, the "comparable company analysis" are all essential elements to an investment banking pitch book.
- Downes, John & Goodman, Jordan Elliot; Barron's Financial Guides, 1995
- Monkey Business: Swinging Through the Wall Street Jungle (ISBN 0-446-67695-0)