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Going Public?

Here’s a Road Map to a Successful IPO


(http://www.startupnation.com/business-articles/3724/1/road-map-ipo.asp)

by Brian O'Connell

They say on Wall Street that the best way to get rich is to buy a dollar for 50 cents, over and over again.
That’s the general idea behind initial public offerings – the financial market’s mechanism for buying stocks of newly minted public
companies for a low price and selling them down the road – sometimes not too far down the road – at a higher price.
IPOs aren’t as complicated as some might think. By definition, an initial public offering is the process by which a private company
turns into a public company. With an IPO, the company makes shares of its stock – known on Wall Street as “equity” – available to
investors. Usually, those shares trade on a public exchange, like the New York Stock Exchange or NASDAQ.
Preparing an IPO is similar to rearing a child, experts say.
“A new public issue is actually the culmination of years of hard work, market positioning, rounds of financing and business success –
rather like sending a child to college,” says Brendan Dougher, a partner at Florham Park, N.J.-based PricewaterhouseCoopers, which
specializes in IPO consulting. “The parents' job is to prepare Junior well enough to be successful on his or her own. Offering a
company to the public is no different.”
There are three key phases in the IPO process:

Phase 1 – Choose a Manager


Companies looking to go public first have to hire a financial advisor (the “underwriter”), usually an investment bank, to run
interference and manage the IPO. Some companies prefer bigger investment banks with a track record of navigating successful IPOs
to market. Other companies may choose a smaller advisor with a more personal touch.
Either way, your company will spend a lot of time interviewing investment bankers, laying out your company’s rationale for going
public and figuring out – with the advisor’s help – what the company will be worth (valuation) on the public market.
Cost is definitely a consideration. While fees vary, most IPO candidates pay up to $1 million for the cadre of financial and legal
specialists needed for their IPO.
Time is a factor, too. Ideally, the sooner you start, the better your prospects.
Companies begin the process of staffing their management team up to two years before the IPO in order to maximize its chance of
success come D-Day, says Barry O’Connor, of the IPO consulting firm MERC Partners.

Phase 2 – Conduct Your Due Diligence


Now that you’ve picked a financial advisor to manage the IPO process, the serious paperwork begins.
In Phase Two, the investment bank will thoroughly examine your company in an effort to understand it and begin the process of
assigning a valuation. Expect a heavy dose of lawyers filing legal documents on your behalf with the Securities and Exchange
Commission, the government regulatory body that oversees the public financial markets.
The key document is your company’s prospectus, known in investment banking circles as the S-1 form. Your entire IPO team –
bankers, lawyers, accountants and markers – will all have a hand in crafting your prospectus. Speed is just as important as
thoroughness here: The SEC will issue a timeline for your prospectus to come due. Once completed, it’s sent to the printer and then to
the SEC for review.

Phase 3 – Marketing/Investor Relations


After the SEC approves your prospectus, it’s time for what Wall Street calls “the road show” to begin. In all the financial and legal
maneuvering, an IPO essentially boils down to you selling your company to investors.
Company management takes to the streets to sell the IPO to potential stockholders, usually institutional investors with deep pockets
(primarily pension funds and mutual-fund money managers). You and your managers can expect to spend up to a month on the road
touting your impending IPO.
Expect lots of questions from money managers about company financials – that’s the bread and butter of IPO investing. You’re going
to need plenty of brochures, PowerPoint presentations, and other marketing collateral – the glossier and more upbeat, the better.
Your mission is to identify buyers of your stock, both directly and indirectly.
“It’s important going into the IPO process to know where and who the likely investors will be and to focus on them,” says Bill Dickie,
president and CEO of Liponex, a Canadian biotech firm that raised $11.5 million in a 2005 IPO.
Conducting research up front will save time in the long run time that could have been lost by promoting the stock to the wrong market,
either geographically or in the wrong dollar range. Be aware that some institutional investors won’t even look at companies that have a
market cap less than $50 million or $100 million.
Particular focus should be placed on touting your IPO to the Wall Street analyst community. Analysts are the mouthpieces for millions
of stock investors, so the more you reach the better.
Studies back that up.
IPOs that are followed closely by many analysts after their offerings tend to do better than those followed by fewer analysts, according
to a 2006 study published in the Journal of Finance.
The study compared the IPOs’ performance with how much coverage or attention they subsequently got from stock analysts. It found
that after a three years, stock returns of closely watched IPOs were, on average, 10 percent higher than those followed by fewer
analysts.
"Based on what we uncovered, analysts are, in some sense, prophets," says Somnath Das, co-author of the study and professor of
accounting at the University of Illinois, in Chicago.
It’s Not Easy Becoming Green – But it’s Doable
Once the road show is over and investors (hopefully) begin lining up to buy your shares, final pricing of your stock begins. That’s the
dollar amount determined for one share of the stock come D-Day, when your company goes public and starts trading on a stock
exchange. You’ll know your IPO is a runaway hit if the stock price trades up on the first day, generating even more cash for your
business.
On the other hand, if your stock sits stagnant or worse, goes into freefall, brace yourself for the wrath of the institutional investors who
will dump your stock at the first sign of trouble.

Tips for a Knockout IPO


• Leave no detail unchecked – always be managing the process.
• Assemble a great team, including bankers, lawyers, accountants, investor-relations specialists and company
executives.
• Set realistic expectations.
• Write a great prospectus – senior management must be hands-on.
• Prepare to meet all regulatory financial checks and deadlines.
• Create a killer road show by selling your business model.
• Expect the entire IPO process to take anywhere from six to nine months.
There’s no loyalty on Wall Street – the only thing that matters is green. But take the phases in order and carefully follow this tips,
you’ll have a shot at generating more cash than you ever thought possible.
Brian O’Connell is StartupNation contributing writer.

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http://www.alldownloadlinks.com/initial-public-offerings-ipo-an-international-perspective-of-ipos_112149.html

(This will assist researchers, academics, and graduate students to further understand the latest research on IPOs.)

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IPO - Listing your Company in Singapore


(http://hubpages.com/hub/IPO-listing-company)

Why list your company


It is the dream of many entrepreneurs to start their own businesses, grow the businesses and eventually bring them public. However, a
public listing should not be the natural progression once your company has grown to a certain size or profit level, nor is it the be-all-
and-end-all. The preparation for an initial public offering (IPO) requires total commitment on the part of the founder and his
management team. They need to look beyond the advantages and glamour, and be fully aware of what it means to be listed. This
article intends to give you an overview of the listing process and some key areas to take note of in embarking on the road to IPO.

The “Why” – Pros And Cons Of Being Listed


An entrepreneur has to weigh the pros and cons of listing in the light of the company’s plans and goals. Early discussions with
professional advisors like consultants, accountants and lawyers can provide him with more specific considerations and perspectives.

The Pros
Ease of raising funds for expansion.
The traditional means of financing for most SMEs is bank borrowings. An IPO provides an alternative to relying on bank funding and
frees the business from fixed repayment commitment. Once listed, dividends due to shareholders, if any, are declared at the discretion
of the management and the company is not subject to fixed payment terms.

Enhanced liquidity of company’s shares.


Investors may buy or sell shares of a listed company in the open market. The founder can thus reap the fruits of his labour by selling
his shares in the open market.

Ability to conduct mergers and acquisition (M&A) activities using the company’s shares
as consideration.
Due to the enhanced liquidity of a listed company’s shares, the company is able to use its shares in place of cash as consideration for
the acquisition of a potential target company . Similarly, the market value of the company could form the basis of a valuation of the
company should the entrepreneur decide to sell his stake in his company, or merge his company with another.

Enhanced image and status of the company


A listed company is generally seen to be more prestigious, stable and financially viable than a private company, having passed the
scrutiny of regulators in its listing attempt. Certain companies, especially MNCs, may hence give priority to listed companies in
awarding contracts. A listing in this instance thus opens doors to more opportunities for a company.
Ability to attract and retain good staff and professional managers
The enhanced image and the liquidity of the company’s shares means that a listed company is able to implement an Employee Stock
Option Scheme (ESOS) to attract and retain good staff and professional managers. In an ESOS, staff are awarded options which are
convertible to shares in the company. The employees will be motivated to work for and align their interests with the company in
effecting an improved share price performance.

The cons
The cons are related to the way the business will be conducted after a listing:

Less flexibility or more bureaucracy in making major decisions


The main adjustment that an entrepreneur would have to make is the significant loss of autonomy in running the business of the listed
company. Major decisions are to be made having regard to the interest of public shareholders, which would probably require
shareholders’ approval. Operationally, interested-person transactions, i.e. business dealings between the listed company and other
companies controlled by the directors, CEO, or controlling shareholders (and the associates of such persons) would similarly require
shareholders’ approval. Shareholders of the company would also need to be mindful of the accumulation of shares in the company as
there may be take-over implications.

Increased compliance costs


A listed company is expected to comply with various regulations, especially in relation to accounting and disclosure requirements.
This implies more management time, effort, and compliance costs for the company post listing.

Higher expectation on disclosure of information and accountability to public


shareholders
A board of directors (BOD) comprising executive, non-executive and independent directors needs to be appointed for a listed
company. The BOD acts as the guardian and protector of public shareholders’ interests to ensure that the company is well-managed
and that shareholders’interests are not compromised. Besides, listed companies are expected to comply with the Code of Corporate
Governance issued by the Corporate Governance Committee of Singapore, to disclose their corporate governance practices and
provide explanations where they deviate from these best practices.

Risk of being take-over targets.


Every listed company is susceptible to takeover raids. Ironically, the more well-run and cash-rich a company is, the more susceptible it
is in being a take-over target. With the dilution of control from a public listing, the founder runs the risk of his listed company being
bought over to the extent of percentage of shares not owned by him. He would then have to contend with other shareholders who may
be less than cooperative.

Increased pressure for short-term performance


With public listing comes closer scrutiny from stock analysts and market players who directly or indirectly drive the share price
performance, demand continual good financial performance, and expect dividend pay-outs. At the expense of long-term growth and
development of the company, the entrepreneur may be pressured to deliver short-term profits or results that underpin the share price
performance.

Commitment to investor relationship management


Investor relationship management is crucial in communicating to the market the financial performance and decisions of the company.
However, investor relationship management demands more management time and effort.
THE IPO DECISION: WHY AND HOW COMPANIES GO PUBLIC BY Jason Draho
(http://books.google.co.in/books?
id=Uil5fLFVl3IC&pg=PA157&lpg=PA157&dq=total+perspective+of+IPOs&source=bl&ots=1ZIW6U5ZF1&sig=qBLVWQZS9YG
512o30nnBEzQeu9E&hl=en&ei=4rKkTbOKBoqgvgP7qbGPCg&sa=X&oi=book_result&ct=result&resnum=10&ved=0CFYQ6AEw
CQ#v=onepage&q=total%20perspective%20of%20IPOs&f=false)
This book gives you a total rundown on beginning and end of IPOs. Very informative. You could take a printout of the book
given on the net and read it at home. Very clear in thought and explanations.
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