Professional Documents
Culture Documents
By:
Pratik
Chandra
Subhadip
Bagchi
IPO
is
• Purposes:
– Growth
– Recapitalization
– Original shareholders diversify
BENEFITS of being a Public
Company
• Expand and diversify equity base:
Individuals
Other
Institutions
• Public exposure and prestige
• Equity-based compensation opportunities for
attracting and retaining key management and
employees
• Creation of ‘Currency’ for acquisitions
• Facilitates other financing opportunities: equity,
convertible debt, cheaper bank loans, etc.
COSTS of being a
Public Company
• Disclosure requirements
• Shareholder Relations
• Corporate governance
• Cultural considerations
Evolution – Capital
Parties
Involved
- BRLM - Broker/Sub-Broker
- Co-Managers - Printer
- Merchant Bankers - Advertising
Agency
- Underwriters’ counsel -
Solicitors/Advocates
- Accountants - Registrars
Preparation for
IPO
• Availability of Infrastructure
Book Building
Steps
involved in
Book
IPO
MIX
Time
2 2 –3 1 Continui
month
Prior to months
SEC Review
mont
Marketing the
ng…
Pricing, Trading
filing Issue and
-Prepare for Follow-on
- Due roadshow -“Red herrings” – Support
diligence presentation print
Valuation - Respond to and distribute -Analyze pricing
-Choose co- SEC -Stock Analysts issues
managers Comments present to and investor
- underwriters’ sales feedback
Documentati forces -Determine
on - Target key investors allocation
-Create underwriting to retail &
syndicate institution
-Presentations to -Begin aftermarket
sell-side trading
analyst
- Roadshow
Pricing
Overview
Typical Pricing
Pricing Process
Last Days of Roadshow
Pricing Day
‘Book’ of
Demand
•Size
•Quality Trading
•Price Sensitivity begins
•Likely aftermarket
Analysi Agreem Allocation Market
s ent s to determin
External Factors on investors es price
•Recent Price/Siz at agreed
Developments e initial
- Stock Price levels price
- Market in general
- Industry Price
- Comparables Support
- New Issues Activity
Green
Shoe
Option
Exercised
Due Diligence
Corporate Level Company
- History
- Mission statement/vision
- SWOT (Strength Weaknesses Opportunity Threats)
analysis
- Objectives and key challenges
- Management team/organizational chart
- Key investment highlights
- Strategic position in the industry
- Industry size/growth rates
- Market drivers
- Major industry trends(spending, commissions, etc.)
- Consolidation
- Segmentation/target markets
Roadshow
Presentation
• The company’s opportunity to sell itself to investors
- Domestic roadshow
- 8 – 10 days (typical in U.S.)
- Approximately 100+ face-to-face meetings
- International roadshows usually shorter than domestic
• Prior to meeting management investors read
prospectus, discuss company with research analysts
and securities salespeople
• Group and individual meetings