skills/memo-builder/references/sector-overlays.md

# Investment Banking Memo Sector Overlays

Load only the overlay that matches the prompt. These overlays sharpen banker judgment; they do not replace the core memo workflow.

## Table Of Contents

- [Healthcare Workflow / Payments Software](#healthcare-workflow--payments-software)
- [Consumer Internet / Marketplace](#consumer-internet--marketplace)
- [Specialty Materials / Industrial Carve-Out](#specialty-materials--industrial-carve-out)

## Healthcare Workflow / Payments Software

Use when the target or issuer is HCIT, revenue-cycle management, payment workflow software, or adjacent vertical software.

### Banker lens
- Determine whether the product is mission-critical, procurement-discretionary, or merely sticky.
- Separate retention, cross-sell, pricing, implementation, and volume drivers.
- Test whether recurring revenue converts into cash after implementation costs, support costs, working capital, and customer concentration.
- Link the analysis to the actual IB question: valuation support, buyer universe, lender appetite, IPO/readiness, sale-process positioning, or diligence risk.

### Must-have memo facts
- Revenue mix and recurring / predictable revenue support.
- Retention, NRR/GRR, bookings, implementation backlog, and large-customer concentration where available.
- Gross margin, EBITDA margin, FCF conversion, capex, NWC, and debt capacity implications.
- Source support for any ARR, retention, or adjusted EBITDA claim.

### Common memo failure modes
- Repeating management's recurring-revenue framing without cash-conversion proof.
- Treating retention as proof of pricing power without checking cross-sell, churn, renewal friction, and implementation burden.
- Using SaaS multiples without explaining growth, margin, retention, scale, and vertical-software quality differences.

## Consumer Internet / Marketplace

Use when the company is a marketplace, consumer internet platform, digital commerce asset, or platform-like business.

### Banker lens
- Separate GMV, revenue, take rate, contribution margin, EBITDA, FCF, and cohort economics.
- Identify which side of the marketplace has the real constraint: supply, demand, retention, liquidity, CAC, incentives, or regulation.
- Translate public-market or strategic-buyer narrative into sale-process positioning, valuation support, buyer rationale, or financing feasibility.

### Must-have memo facts
- Active users, payers, transactions, GMV, take rate, frequency, retention, CAC, contribution margin, and segment mix where available.
- Quality of growth: organic versus paid, repeat versus one-time, price versus volume, and incentive-adjusted economics.
- Valuation support by growth, margin, scale, strategic scarcity, and buyer synergy logic.

### Common memo failure modes
- Showing platform scale without unit economics.
- Presenting growth without cohort or retention quality.
- Assuming strategic buyer interest without articulating synergy, overlap, integration, or antitrust constraints.

## Specialty Materials / Industrial Carve-Out

Use when the memo involves specialty materials, industrials, manufacturing, chemicals, engineered products, or a corporate carve-out.

### Banker lens
- Bridge reported EBITDA to standalone EBITDA and underwritten EBITDA.
- Treat TSA, stranded costs, dis-synergies, separation capex, shared sites, environmental liabilities, and working capital as central economics, not footnotes.
- Tie valuation and financing capacity to cyclicality, customer concentration, maintenance capex, and price-cost spread.

### Must-have memo facts
- Reported, adjusted, standalone, and underwritten EBITDA bridge.
- End-market mix, customer concentration, pricing mechanism, raw material pass-through, backlog, capacity, and utilization.
- Maintenance capex, separation capex, NWC needs, debt capacity, covenant headroom, and downside liquidity.

### Common memo failure modes
- Treating parent allocations as standalone economics.
- Understating capex, environmental exposure, stranded costs, or working-capital needs.
- Making the base case depend on multiple expansion, speculative add-ons, or perfect carve-out execution.