Greensheet: What It Means and How It Works

Key takeaways
* A greensheet is an internal underwriter document that summarizes the main features of a new issue or IPO for brokers and institutional sales desks.
* It highlights advantages, risks, and initial pricing to help salespeople identify large-volume buyers.
* It is not a substitute for the prospectus and must contain only information that appears in the prospectus; it may not be distributed publicly.

What is a greensheet?

A greensheet is a concise, internal marketing memo prepared by an underwriting firm to summarize a new security offering (including IPOs and other first-time market issues). Its audience is brokers and institutional sales desks within the underwriting firm, and its purpose is to prepare sales teams to market the issue and to identify potential large-scale buyers.

Why issuers use underwriters

When a company issues stock or bonds to raise capital, it typically hires an underwriter to:
* Help determine the initial offering price.
* Buy the securities from the issuer.
* Sell the securities to investors through the underwriter’s distribution network.

The greensheet is part of the underwriter’s sales preparation toolkit.

Typical contents of a greensheet

• Brief overview of the company and the offering.
• Key investment positives and selling points.
• Principal risks and disadvantages.
• Initial pricing expectations and allocation guidance.
• Target buyer profiles and suggested sales strategies.
• Distribution and trading considerations.
• A disclosure explaining the document’s purpose, distribution limits, and that it is not a solicitation.

Greensheet vs. prospectus

• Prospectus: A comprehensive, legally required document filed with the SEC and made available to the public. It provides full details about the offering.
• Greensheet: A short, internal summary intended only for registered representatives and institutional sales desks. It is not a replacement for the prospectus and must not introduce material not present in the prospectus.

Legal restrictions and best practices

• Greensheets must not be circulated outside the underwriting firm’s brokers and institutional sales desks.
• By regulation, they should only contain information that appears in the prospectus and must present a balanced view of benefits and risks.
• Greensheets should include explicit disclosure of their limited purpose, distribution restrictions, and that the content is not an offer or solicitation.

How brokers use greensheets

Sales teams use greensheets to quickly assess whether an offering fits client needs, to prioritize outreach to potential large-volume buyers, and to align on pricing and allocation strategy before broader marketing and distribution.

Conclusion

A greensheet is a practical, regulated internal tool that helps underwriters and their sales teams communicate the essentials of a new issue efficiently. It streamlines internal selling decisions while remaining tethered to the full, public prospectus.