Glossary
Investment Committee Memo (IC Memo)
An investment committee memo (IC memo) is the document a deal team presents to its firm's investment committee to request approval for an equity investment, acquisition or fund commitment. It sets out the investment thesis, valuation, financing, projected returns, key risks and mitigants, diligence findings and conditions for closing.
How it is used in underwriting
IC memos are central in private equity, real estate investment, venture capital and corporate development. A typical memo covers the business or asset, market and competitive position, the investment thesis and value creation plan, historical and projected financials, valuation and purchase price, capital structure, base, upside and downside returns (IRR and MOIC), sensitivity analysis, key diligence findings, risks and mitigants, exit options and required approvals. Committees use it to test whether the thesis is supported by evidence and whether the expected return compensates for the risks taken.
The best IC memos are candid about what could go wrong. They identify the few assumptions that drive returns, typically entry price, growth, margin improvement, leverage and exit multiple, and show what happens if those assumptions miss. Weak memos rely on management projections without independent support, present only a base case, or bury unresolved diligence items. Compared with a lender's credit memo, an IC memo focuses more on upside and return on equity, but strong committees still demand downside analysis and a clear view of how capital could be lost. A decision log of committee questions and conditions should follow the memo.
Frequently asked questions
What is included in an investment committee memo?
An IC memo usually includes an executive summary and recommendation, company or asset overview, market analysis, investment thesis, financial history and projections, valuation, financing structure, returns across scenarios, sensitivity tables, diligence findings, key risks and mitigants, exit strategy and conditions to closing.
What is the difference between an IC memo and a credit memo?
An IC memo supports an equity investment decision and focuses on value creation, returns and upside as well as risks. A credit memo supports a lending decision and focuses on repayment capacity, collateral and downside protection. Both should be evidence-based, but they answer different questions about the same deal.
How many investment committee memos does a deal need?
Many firms use two stages: a preliminary memo to approve spending on diligence and submitting a letter of intent, and a final memo to approve the investment after diligence is complete. Some firms add updates if terms change materially before closing. Practices vary by firm and deal size.
Related terms
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