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What is an IC Memo?

The Investment Committee (IC) memo is the most important document in a PE deal process. It is the formal written recommendation that the deal team presents to the firm’s senior partners — the investment committee — to approve or decline an investment. The IC typically includes 3-7 senior partners who have collective authority over every investment decision. Writing an IC memo is both an analytical exercise and a persuasion exercise, but the best memos prioritize analytical rigor over salesmanship. IC members are experienced investors who have seen hundreds of deals. They will probe every weakness, question every assumption, and test whether the deal team has truly stress-tested the investment thesis. A memo that minimizes risks or glosses over weaknesses loses credibility fast. The standard IC process works in stages. Many firms have a “first IC” (preliminary discussion with high-level thesis) and a “final IC” (full memo with completed diligence). Some firms add an “IC quick screen” at the very beginning — a 15-minute presentation to decide whether to pursue a deal. The memo format varies by firm but the core elements are universal.

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Why It Matters

The IC memo is the single document that captures everything the firm knows about a potential investment. It serves as the decision-making framework for committing millions (or billions) of dollars. A well-structured memo ensures the IC can make an informed decision; a poorly structured one leads to bad decisions or extended debates that slow the process and risk losing the deal. Beyond the immediate decision, IC memos become part of the firm’s institutional memory. Years later, they are referenced during exit planning, fund reviews, and LP reporting. The quality of IC memos reflects the quality of the firm’s investment process.

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Key Concepts

TermDefinition
Investment ThesisThe core argument for why this is an attractive investment, typically expressed as 3-5 “pillars” or reasons to invest
Sources & UsesA table showing where the capital comes from (equity, debt) and where it goes (purchase price, fees, working capital)
Capital StructureThe mix of debt and equity used to finance the acquisition, including senior debt, subordinated debt, and sponsor equity
Quality of Earnings (QoE)An independent analysis confirming the company’s “true” EBITDA after adjusting for one-time items and accounting anomalies
Value Creation LeversSpecific initiatives the PE firm plans to execute post-close to grow earnings (revenue growth, margin expansion, M&A, operational improvements)
Exit StrategyHow the firm plans to sell the investment in 3-7 years (strategic sale, financial sale, IPO, dividend recap)

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How It Works

1

Gather Inputs

Collect: company overview and business description, industry/market context, historical financials (3-5 years), management assessment, deal terms (price, structure, financing), DD findings (commercial, financial, legal, operational), value creation plan / 100-day plan, and returns analysis (base, upside, downside).
2

Draft Memo Structure

Follow the standard IC memo format: I. Executive Summary (1 page), II. Company Overview (1-2 pages), III. Industry and Market (1 page), IV. Financial Analysis (2-3 pages), V. Investment Thesis (1 page), VI. Deal Terms and Structure (1 page), VII. Returns Analysis (1 page), VIII. Risk Factors (1 page), IX. Recommendation.
3

Format and Review

Default output is Word document (.docx) with professional formatting. Include tables for financials and returns, not just prose. Ensure EBITDA bridges, S&U tables, and returns math are internally consistent.

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How to Add to Your Local Context

claude plugin install private-equity@financial-services-plugins
Customize the IC memo for your firm: 
## Firm IC Memo Template
- Use [Your Firm] standard header and formatting
- Required sections: [list any firm-specific sections]
- Required exhibits: Sources & Uses, Returns Sensitivity, EBITDA Bridge
- Recommendation format: Proceed / Pass / Conditional Proceed with conditions listed
- Page limit: [e.g., 15-20 pages excluding exhibits]
Upload your firm’s standard memo template as a reference file for Claude to match formatting, section ordering, and style conventions.

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Best Practices

IC memos should be factual and balanced — present both bull and bear cases honestly. Do not minimize risks. IC members will find them anyway; credibility matters.
  • Use the firm’s standard memo template if one exists; consistency matters across the portfolio
  • Financial tables should tie — check that EBITDA bridges, Sources and Uses, and returns math are internally consistent
  • Ask for missing inputs rather than making assumptions on deal terms or returns
  • The Executive Summary should be a standalone document — many IC members read only that before the meeting
  • Risk factors should be ranked by severity and likelihood, with specific mitigants for each
  • Include clear “deal-breaker” risks (if any) separately from manageable risks