Teaser

What is a teaser?

Teaser (short profile, also called a brief exposé) describes a concise presentation of a company with which potential buyers or investors are approached for the first time, before they receive confidential information. It describes the business, key figures and reason for the transaction to the extent that the recipient can assess their interest. The recipient then decides whether to enter into a confidentiality agreement, that is, to commit by contract to secrecy, in order to get to know the company better. The term derives from the verb "to tease": in film and advertising it stands for a short foretaste, in the transaction business for this short profile.

The teaser originates from company sales, where it goes at the start of an auction process, an orderly sale to several interested parties in competition, to the addresses on a long list. This is the list of all buyers that come into question. In a sale, the teaser is generally anonymised; in financing rounds, it precedes the pitch deck. It is usually sent by the adviser engaged, who also collects the responses. There is no statutory form. Its limits arise from confidentiality towards employees, customers and competitors and from the care that applies to every statement made to interested parties.

Position in the sale process and in the financing round

In the sale process

A structured sale process begins with the approach, after the documents have been prepared. The order of the further steps is largely uniform in practice:

1. sending the teaser to selected strategic buyers and financial investors
2. concluding a confidentiality agreement with each interested party that wants to go further
3. sending the information memorandum, the detailed presentation of the company, and a process letter with the timetable and requirements for offers
4. indicative, non-binding offers
5. selecting a short list (the narrower selection), management presentations and opening the data room
6. binding offers, negotiation of the purchase agreement, signing and closing

The teaser is thus the only document that an interested party receives without a contractual commitment. Its content is to be chosen so that passing it on or its becoming known does no harm.

In the financing round

The teaser of a financing round is often a one-pager or a short collection of slides that precedes the full pitch deck. It usually names the company, because without this information investors can hardly assess whether it fits their strategy or competes with existing holdings. It is anonymised mainly when strategic investors from the same sector are approached or when the round is not yet to become known to employees and customers.

Anonymised or open teaser

The anonymised teaser (blind teaser) works with a project name and describes the company in such a way that outsiders cannot identify it. The open teaser names the company and brand. The choice depends on what damage threatens if it becomes known prematurely and how urgently the recipients need the name to assess their interest.

Anonymisation is more than leaving out the name. A company often becomes recognisable only through the combination of individual details: niche, region, headcount, year of founding, a special certification or a well-known major customer. Usual means are:

• describe the industry and product more generally than the company's internal language does
• state the region broadly, for example "Western Germany" or "the DACH region"
• round key figures or give them as a range
• describe customers only by industry, size class and concentration
• leave out the year of founding, the founders' story and awards

Before sending, the teaser is ideally read by a person who knows the industry but is not involved in the project. If that person recognises the company, it is generalised further.

Content and length of a teaser

One to two pages, or at most around five slides, are usual. The content follows a largely fixed pattern:

• Short description: activity, products and target customers in a few sentences.
• Key figures: revenue and earnings for two to three past years and the current year. The earnings measure is usually adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation, excluding one-off special effects), and for growth companies in addition recurring revenue and growth rate.
• Strengths: three to five verifiable reasons for attractiveness, for example a high share of recurring revenue or low customer concentration.
• Reason and structure: majority sale, full sale, succession or growth capital; in a financing round the targeted round size.
• Next step and contact: reference to the confidentiality agreement and contact person at the adviser.

A teaser ends with a disclaimer: it is not an offer, the information is unverified, and only a later contract is binding. Such clauses are meant to limit pre-contractual liability, that is, liability for incorrect information even before a contract is concluded. For intentionally incorrect information, however, liability cannot be excluded in advance under Section 276(3) of the German Civil Code (BGB). The information in the teaser must therefore be correct, even if it is rounded.

Relationship to the confidentiality agreement and the information memorandum

Teaser, confidentiality agreement and information memorandum form a sequence of stages. The teaser contains only what may become known even without a commitment. The confidentiality agreement is the condition for everything further. It obliges the recipient to use the information only to assess the transaction, regulates disclosure to advisers and financiers and often contains a non-solicitation clause for employees. With the anonymised teaser, the interested party learns which company is involved only afterwards.

The information memorandum is the detailed presentation of the company for the first round of offers, with market, business model, organisation, historical figures and planning. It builds on the teaser and must not contradict it: a key figure that was stated as a range in the teaser must lie within that range in the memorandum. If competitors are among the interested parties, it is also determined which competitively sensitive information becomes accessible only later and only to a defined circle of persons (clean team).

Practical example: anonymised teaser for a company sale

A shareholder wants to sell the majority in a software company that offers shift-planning software for clinics and care facilities. The company has 45 employees, is based in a medium-sized city in North Rhine-Westphalia and most recently achieved revenue of EUR 7.8 million with adjusted EBITDA of EUR 1.9 million. The first draft of the teaser described it as the leading provider of shift-planning software for clinics in North Rhine-Westphalia with 45 employees, founded in 2009.

For an industry insider, the company was thus clearly identifiable. The revised version carries the project name "Project Pacemaker" and contains this information:

• Activity: provider of planning software for healthcare institutions based in Western Germany
• Revenue: EUR 7 to 9 million, of which more than 80% recurring
• adjusted EBITDA: around EUR 2 million
• Customers: more than 300 institutions, no customer with more than 5% of revenue
• Employees: 40 to 50
• Reason: succession arrangement, sale of at least 51% of the shares

All information remains correct but permits no inference as to city, year of founding or market position in an individual federal state. The description as leading provider is dropped because it could not be substantiated and would rather have made it easier to search for the company.

Distinctions: teaser, pitch deck and information memorandum

• Pitch deck: the detailed investor presentation of a financing round, usually with 15 to 20 slides, which names the company. The teaser precedes it or replaces it in the first approach.
• Information memorandum: the detailed presentation of the company in the sale process, which is sent only after the confidentiality agreement.
• Equity story: the substantive case for why the company is attractive. The teaser reproduces it in highly condensed form.
• Long list: the list of possible buyers or investors to whom the teaser goes. Its quality determines whether the teaser reaches the right recipients.

Common mistakes

• Recognisable through combination. Each individual detail is kept general, but together niche, region and headcount reveal the company.
• Too much content. A teaser with customer names, pricing models and planning figures gives away before the confidentiality agreement what should be disclosed only afterwards.
• No order of magnitude. Without revenue and earnings, interested parties cannot check whether the company fits their investment criteria and do not respond.
• Unsubstantiated superlatives. Labels such as "market leader" can rarely be substantiated and, with a narrow niche description, make identification easier.
• Sending without a log. Without a list of who received the teaser and when, neither confidentiality can be tracked nor the process steered.
• Contradiction with the information memorandum. If a key figure in the memorandum lies outside the range from the teaser, the first round of offers begins with an explanation instead of offers.

Frequently asked questions

How long is a teaser?

Usually one to two pages or at most five slides. Longer versions miss their purpose because they contain information that should not circulate without a confidentiality agreement.

Who sends the teaser?

As a rule the company's adviser or the seller. This keeps the identity of the company hidden until the confidentiality agreement is in place, and all follow-up questions run through one point of contact.

Which figures are appropriate in a teaser?

Rounded values or ranges for revenue, earnings and growth, plus the share of recurring revenue where it is essential to the business model. Detailed planning figures, margins of individual products and customer lists belong in the information memorandum or the data room.

Does an anonymised teaser also make sense in a financing round?

Only in certain situations. Financial investors usually want to know immediately which company is involved. Anonymisation is worthwhile when competitors or strategic investors from the same sector are approached or when the round is not yet to be known internally.

What applies if a recipient recognises the company anyway?

Without a signed agreement, the recipient is generally not bound to confidentiality by contract. Only careful anonymisation before sending therefore provides effective protection. If an interested party indicates that it has recognised the company, a confidentiality agreement is concluded with it promptly, before further conversations take place.

The Roemer Capital view

In a sale process, the teaser goes out from Roemer Capital under a project name and with Roemer Capital as sender. Before sending, it is read by people who know the industry but do not work on the mandate, with a single task: to recognise the company. If they succeed, it is generalised further. The guideline for length is at most five slides.

Because signed confidentiality agreements can follow quickly after a teaser, Roemer Capital prepares the information memorandum and data room before the first mailing. The data room should be ready to provide within 24 hours, so that no interested party waits for documents while others set the timetable. Every mailing and every response is recorded in a process list.