Investment Committee Memo (IC Memo)
Also called: IC memo, Investment memo, Deal memo
An investment committee memo is the written recommendation presented to a firm's decision-making body, summarizing a deal's thesis, underwriting, risks, and proposed terms in order to obtain approval to proceed.
The IC memo is where underwriting becomes a decision. A strong one states the investment thesis in a few sentences, presents the returns with their key sensitivities, and treats risks candidly rather than defensively. Committees approve deals whose weaknesses are identified and mitigated far more readily than deals presented as flawless.
Structurally the memo is an argument, not a data dump. The returns table matters, but what earns approval is a clear statement of why this asset, why this price, why this market, and what has to be true for the plan to work.
Rules of thumb
- Lead with the recommendation and the three reasons behind it. Committees read the first page carefully and skim the rest.
- Include the downside case explicitly. A memo without a bear case invites the committee to invent one.
Related terms
- Letter of Intent (LOI)
A letter of intent is a short, generally non-binding document submitted by a prospective buyer that sets out the proposed price and principal terms of a transaction before a purchase agreement is drafted.
- Internal Rate of Return (IRR)
The internal rate of return is the annualized discount rate at which the present value of a deal's cash flows equals zero, making it the time-weighted compound annual return on invested equity.
- Due Diligence
Due diligence is the contractual period after a purchase agreement is signed during which a buyer inspects the property, audits its financials and leases, and can typically terminate and recover earnest money.