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A greensheet is a document created at an underwriter's office for internal use by brokers and clerks as they prepare to market an initial public offering (IPO). Such documents are designed for internal circulation only and are not shared with investors, members of the public, or the company being marketed. They are often very rough and may provide incomplete information, as they are designed as a reference resource, not an official sales document.
The greensheet reviews the information in the prospectus for the new offering, providing data about the company, its products, and its history. In addition, it may bring up relevant data, such as comparisons with other companies and the history of stock performance in the same sector that the IPO will be released in. The greensheet can also review pros and cons of particular investments, presenting comprehensive information designed to be used by a representative to help prospective buyers make an informed decision about securities purchases.
All of this information is used by company representatives preparing to sell to investors. They can use the pros and cons, for example, to develop arguments and counterarguments that may come up during a sales meeting, and to come up with responses to likely queries and concerns. The financial data included in the greensheet is also valuable for reference as it allows people to provide potential clients with hard numbers about a company's performance history.
The creation of such documents can involve a number of researchers who work on developing various aspects of the greensheet to make it as accurate, complete, and useful as possible. However, information can change rapidly during the course of developing an initial public offering, and a greensheet may not always be completely accurate. Outdated and erroneous information can appear and the document may be dated so people know how recent it is. Very old documents tend to be viewed with distrust, as the situation may have changed since the time they were generated.
This document is not an offering circular, prospectus, brochure, or similar document designed to sell securities. Greensheets may include disclaimers to the effect that they are not solicitations to buy securities, to make the purpose of the material clear to anyone who accidentally comes into contact with the document. Should prospective clients obtain a greensheet about an upcoming offering, the disclaimer warns them about the purpose of the information and how the data can be used.
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