A greensheet is a document prepared by an investment bank's underwriting team to advertise and market the security in a new issue or initial public offering (IPO) to the broker-dealer network. Due to the nature of the underwriting process, greensheets are typically only distributed to registered broker-dealers and institutional investors who have access to the underwriting firm. The document provides an overview of the new security issue, including pricing information, the number of shares available for sale, the financials of the issuer, and any other pertinent information to potential primary and secondary buyers.

Greensheets often include information on the corporate structure, assets, capital resources, outside investments, and debt structure of the issuer. They may also include the company’s financial performance and the terms of the offering, such as the maturity date and the minimum amount of investment. This information allows the brokers and other financial institutions to more accurately determine how attractive the investment is.

In addition to providing information on the new security issue, greensheets can also be used as a marketing tool. Underwriters may include a description of the company’s products, services, and competitive advantages. This helps brokers to quickly evaluate the issuer and determine how it fits into the larger investment landscape.

By distributing greensheets, the underwriter is giving the leads they are working with all the necessary data points to make a decision on whether or not to pursue the investment opportunity. Depending on the preferences of the investor, greensheets can also provide additional information on the trade, such as the duration of the offering, the underwriter’s commission rate, and other related details.

Greensheets play a crucial role in creating liquidity for a new issue or IPO. By providing potential buyers with the necessary information, they can quickly assess the risks and rewards of investing in the company and participate in the offering. By providing a comprehensive access to the details of the offering, the underwriting team is able to increase the potential for successful execution of the offering.