Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Standard view
Full view
of .
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
Going Public

Going Public

|Views: 110|Likes:
Published by api-3727090

More info:

Published by: api-3727090 on Oct 15, 2008
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as DOC, PDF, TXT or read online from Scribd
See more
See less






The Role of the Players
What do corp fin professionals actually do on a day-to-day basis to
underwrite an offering? The process, though not simple, can easily be

broken up into the same three phases that we described previously. We
illustrate the role of the bankers by walking through the IPO process in
detail. Note that other types of stock or debt offerings closely mirror the
Hiring the managers
This phase in the process can vary in length substantially, lasting for

months or just a few short weeks. The length of the hiring phase depends
on how many I-banks the company wishes to meet, when they want to go
public, and how market conditions fare. Remember that two or more

investment banks are usually tapped to manage a single equity or debt
complicating the hiring decisions that companies face.
MDs and sales calls
Often when a large IPO candidate is preparing for an offering, word gets
on the Street that the company is looking to go public. MDs all over Wall
Street scramble to create pitchbooks (see sidebar on next page) and set
meetings called \u201cpitches\u201d in order to convince the company to hire them

the lead manager. I-bankers who have previously established a good
relationship with the company have a distinct advantage. What is

surprising to many people unfamiliar with I-banking is that MDs are
essentially traveling salespeople who pay visits to the CEOs and CFOs of
companies, with the goal of building investment banking relationships.
Typically, MDs meet informally with the company several times. In an
initial meeting with a firm\u2019s management, the MD will have an analyst and
an associate put together a general pitchbook, which is left with the
company to illustrate the I-bank\u2019s capabilities.
Once an MD knows a company plans to go public, he or she will first
discuss the IPO with the company\u2019s top management and gather data

regarding past financial performance and future expected results. This
farmed out to a VP or associate and crucial to the valuation, is then used
the preparation of the pitchbook.
Pitchbook preparation

After substantial effort and probably a few all-nighters on the part of
analysts and associates, the deal-specific pitchbook is complete. The most
important piece of information in this kind of pitchbook is the valuation of
the company going public. Prior to its initial public offering, a company

has no public equity and therefore no clear market value of common
So, the investment bankers, through a mix of financial and industry
expertise, including analysis of comparable public companies, develop a
suitable offering size range and hence a marketable valuation range for

company. Of course, the higher the valuation, the happier the potential
client. At the same time, though, I-bankers must not be too aggressive in
their valuation \u2013 if the market does not support the valuation and the IPO

fails, the bank loses credibility.
The pitch
While analysts and associates are the members of the deal team who

the most time working on the pitchbook, the MD is the one who actually
visits the company with the books under his or her arm to make the pitch,

perhaps with a VP. The pitchbook serves as a guide for the presentation
by the MD) to the company. This presentation generally concludes with

valuation. Companies invite many I-banks to present their pitches at
separate meetings. These multiple rounds of presentations comprise what
is often called the beauty contest or beauty pageant.
The pitch comes from the managing director in charge of the deal. The
MD\u2019s supporting cast typically consists of a VP from corporate finance, as
well as the research analyst who will cover the company\u2019s stock once the
IPO is complete. For especially important pitches, an I-bank will send other

top representatives from either its corporate finance, research or

Activity (3)

You've already reviewed this. Edit your review.
1 hundred reads
mikeseattlewa liked this
shumba liked this

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->