If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course, which help thousands of candidates land top jobs every year.
Overview
Throughout your career in finance, you’ll be asked to prepare several different kinds of deal summaries.
When you’re preparing for private equity interviews, you’ll need to know how to summarize your investment banking deal experience and thoughtfully talk about the dynamics of each deal you worked on. You can check out a free preview of our Private Equity Recruiting Course, in which we walk through a private equity deal.
When you’re on the job as an investment banking analyst, you’ll need to send out e-mails that summarize important public deals in order to efficiently inform your team.
When you’re building an investment committee memo in a buyside role, you’ll be asked to summarize relevant precedent transactions or make case studies on similar investments in order to help validate a thesis.
To help you with these tasks, we’re going to explain how to put together a simple deal summary. There’s not really a strict format and different firms will do things differently, but below are some helpful guidelines I try to refer to.
Please note that the term “deal” is relatively broad here and covers all forms of corporate transactions, including:
Mergers
Acquisitions
Private equity investments
Equity or debt financing deals (e.g., an IPO)
Corporate partnerships
Determine the Purpose of the Deal Summary
The first step in creating a deal summary is to think about the purpose of the summary.
In an interview, you’re only going to have 2 or 3 minutes to give an overview of the deal, so it shouldn’t be very long. You’ll need to know the deal in its entirety, but your initial presentation of the deal should be concise. In a private equity interview, walking through your deal is probably the most common technical question after the Paper LBO.
Some deal summaries will become full-on case studies that could be 10-20 pages. Some summaries will just be a one-page write-up that gets appended to an e-mail.
You should really think about who is reading the summary and what information they are really looking for (a senior banker who only wants the headline? An interviewer who is trying to evaluate you? A VP who needs to be more detailed and knowledgeable about the topic?)
Context really matters. As usual, the best approach here is to look for precedents – look for examples of appropriate deal summaries for that purpose.
Think About What to Include
The second step is to list out and organize all of the information you might want to include in the summary. A good trick for this is to just look up the company’s investor presentation or press release and see what information they decided to include.
Also note that there are many different kinds of deals and contexts out there, so you won’t always be able to consistently touch on everything from each category. An IPO won’t have a strategic buyer; an equity financing might not have a relevant debt multiple; a private company deal might not have publicly available EBITDA.
Below is a list of the key categories I try to think of when putting together a summary.
Business Model
Goal: Give a clear description (in 1-2 sentences) of how the company makes money
Explain what specific functions in the value chain the business does (designing products, manufacturing, distributing, etc.)
Include any key customers or suppliers that can help explain the business or give context
Involved Parties
Goal: Articulate the key parties and stakeholders in the transaction, which may include:
Buyer
Seller
New and existing investors
Any other key stakeholders (e.g., founder, competitors, impacted political groups)
Deal Rationale / Investment Highlights
Goal: Summarize the 2-4 main conversation points of the transaction, which may cover questions like:
What did each party get out of the transaction?
What was the strategic rationale of each party?
What were the characteristics of the deal process (auction, proprietary, competitive process, etc.)?
What was the IRR or MoM of the transaction?
What were the financing elements of the deal? (cash / stock mix, terms of financing package)
Financial Metrics
Goal: Touch upon the key financial metrics of the deal
Enterprise value
Revenue (can be used to calculate EV / Revenue)
EBITDA (can be used to calculate EV / EBITDA and EBITDA margin)
Revenue YoY growth
Debt multiple
In an interview setting, you’ll want to also discuss your involvement on the deal and the specific tasks you did.
Your Involvement
Goal: Convince the interviewer you actually contributed to the deal by discussing what you did
What were the specific tasks or elements of the project you were responsible for?
Who did you interface or directly work with?
What are some obstacles you had to overcome to get the deal done?
If this is an e-mail summary, you’ll likely also want to attach some relevant documents or include helpful articles if there are any. For example, if it’s a public company, they will be required to post company filings regarding the transaction.
Company filings (e.g., DEFM14A, S-4, etc.)
Company press releases
Equity research
Relevant news articles
Example #1 (Private Equity Transaction in an Interview Setting)
Let’s go over an example of how you might walk through a deal in an interview setting. We’ll cover Thoma Bravo’s acquisition of Calypso Technology in March 2021. We’ll present it as though you were an investment banking analyst on the deal.
Question: Could you please walk through this first deal on your resume regarding Thoma’s acquisition of Calypso?
Answer: Yes, I’d be happy to. Earlier this year, I was involved on Thoma Bravo’s $3.75B acquisition of Calypso Technology, a SaaS company that provides trading, risk and compliance solutions for financial institutions. Calypso is a B2B business whose flagship product, Bank-in-a-Box, helps companies with all aspects of their day-to-day financial management. For example, they help companies with electronic trading, risk management of derivatives, and cash management. Calypso designs and distributes its software products, which are used by over 40,000 market professionals.
I was an analyst at Jefferies and we co-advised Thoma Bravo with Evercore on the transaction. My primary task was assisting with the development and sanitization of the buyer’s operating model. I went through the data room in order to assess potential headcount reduction and built out schedules to help underwrite the EBITDA forecast.
Thoma Bravo acquired the business at an enterprise value of $3.75B, which implied a ~37x EBITDA on the business’ $100mm of LTM EBITDA. Thoma acquired this business from Bridgepoint and Summit Partners, who paid $800mm for the business in 2016. The transaction underwrote meaningful EBITDA growth over a 5 year horizon, largely from cost savings and realized operating leverage. Thoma typically invests in businesses with this kind of stable subscription-based model and Calypso’s net retention rate is among the best in the industry.
Additional Resources:
Example #2 (Written Deal Summary)
To give another example, let’s look at a growth equity financing deal and how one might summarize this in an e-mail. We’re going to look at Splice’s Series C funding round. Splice is a private company, so there is a limit to the amount of detail we can include.
Investment Highlights
In March 2019, Splice raised a $57.5mm Series C round from a consortium of venture capital firms led by Union Square Ventures and True Ventures
USV was an initial investor of Splice back in 2013
Round also included Matthew Pincus, LionTree, Lerer Hippeau, Founders Circle Capital, Flybridge and DFJ Growth
Estimated valuation of $500mm (per Bloomberg)
Funding raised to date of $105mm
Splice is an online platform and marketplace that helps musicians purchase sounds, download instrument presets, and rent digital instruments
Splice has been described as a “GitHub” for music producers
Investment will be used to develop additional products and features on the platform – the money will be used “to improve the existing marketplace and workflow tools”
Business Model
Splice designs and maintains a digital platform in which users can buy sounds (Splice Sounds), rent digital instruments (Rent-To-Own), and collaborate with other musicians (Splice Studio)
Splice charges users a monthly subscription fee (~$10-$20 depending the plan) to get access to the company’s digital platform
Customers are musicians who are looking to buy sounds from the marketplace
“Suppliers” are musicians and audio engineers who upload these sounds, who then earn a share of the marketplace revenue
Splice has paid $15mm in royalties to these music creators
As of 2021, there are ~4mm Splice users, who collectively download more than ~400mm samples per month
Company has 140 employees and was founded in 2013 by Steve Martocci, who previously founded and sold GroupMe
