In this section you will learn more about:

• Objective of the Early Investment Committee (IC) Review
• Issues to Consider
• Documents

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Objective of the Early Investment Committee (IC) Review

• Introduce the potential Investee and transaction to the IC via the "Alert", thereby informing them that an offer will likely be made, subject to due diligence
• Provide the IC with an opportunity to give early warning should they have any objections, particularly ones of principle, to the proposed investment.
• Elicit comments from those who have relevant industry experience, and can assist in the due diligence process.
• Inform other members of the Fund Management team (particularly relevant for larger organizations)
• Provide the potential Investee with a clear signal of intent to proceed

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Issues to Consider

• Who within the deal team is responsible for preparing the "Alert"?
• Should the format of the "Alert" be standardized (see guidelines below)?
• Who receives copies?
• How many days ahead of the Initial IC Review should the "Alert" be circulated?
• How does the Initial IC meet? (e.g. by phone, in person, by mail)
• Who participates in the decision making process?
• Who keeps track of decisions of the IC?
• Who keeps the minutes of the Initial IC meeting (decisions, issues covered, additional issues or information required?)
• How and when to inform the potential Investee in question of the meeting outcome?

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Documents

• The "Alert" should include the following details:
  • Introduction: a short synopsis
  • The Investee's business: products, markets, and competition
  • Management: a résumé   of senior management
  • Financials: historic and forecast profit and loss, balance sheet 
  • Deal structure:
    • Basic terms
    • Entry statistics (e.g. price/earnings or price/EBITDA ratio) 
    • Proposed Investment Strategy (explain how the Fund will make money on the deal)
    • Expected exit
    • Key issues to be resolved, potential dealbreakers, principal risks
    • Due diligence: nature of the due diligence to be carried out and any external consultants needed
• Confidentiality Agreement
• Mandate letter and other correspondence with the potential Investee

Download this Suggested Fund Manager Deal "Alert".

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