xavGE

The IPO on-ramp under the JOBS Act
the right investment bank and counsel
experienced in the industry and types of
initial public offerings of the EGC.
(b) Week 1
Organizational meeting: The traditional
organizational meeting would still occur
in the case of an IPO for an EGC. However,
if an EGC is uncertain of its ultimate
timing for its IPO, it may decide to work
more informally with a few underwriters
to prepare for an eventual formal kickoff
of the IPO process with the organizational
meeting.
(c) Weeks 2 to 5
Drafting: The EGC would still prepare the
same Form S-1 registration statement and
prospectus. The drafting process is also
largely the same as for traditional IPOs. In
general, the contents of the document are
same as those outlined in further detail in
Section 3.2(d). The contents are different
in the following ways:
• The financial statements may include
two (rather than three) years of audited
financial statements and selected
financial statement information for the
previous two (rather than five) years.
• The MD&A of the EGC’s performance
need not cover more than the past two
(rather than three) years plus any “stub”
periods;
• The compensation disclosure and
analysis for executives need not include
more information than is required of
a smaller reporting company, meaning
that the document need not include,
among other things, compensation
discussion and analysis or tabular
information for more than three
executive officers and may omit certain
compensation-related tables such as
the grant of plan-based awards, and
option exercise tables; and
• The EGC must make affirmative
disclosure in the registration statement
as to whether it will elect to “opt
out” of new accounting standards
that are not also applicable to private
companies.
Due diligence: The due diligence process
for an IPO of an EGC is the same as that
for traditional IPOs. Because this process
is time-intensive, an EGC should consider
its overall readiness to complete an IPO
before embarking on the IPO process.
Legal and other documentation: In
addition to the prospectus, the EGC
and underwriter’s counsel will work
with the investment bank, the EGC and
the auditors to draft and complete the
documentation outlined in Section 3.1(b)
(e.g., underwriting agreement, comfort
letter, etc.) The primary differences in the
documentation of traditional IPOs and
those of an EGC include:
• the underwriting agreement will
contain additional representations
and warranties relating to a company’s
status as an EGC and representations
and covenants relating to test-thewaters
communications; and
• the lock-up agreements for existing
shareholders no longer need contain
what are known as “booster shot”
provisions—where the typical 180-
day lock-up period can be extended if
the EGC issues an earnings or other
material press release or if material
news about the EGC is released prior to
the expiration of the lock-up period.
Determine listing venue: The EGC should
still determine earlier in the process
whether it is eligible to list on the NYSE or
other exchange and reserve a ticker symbol.
(d) Week 6
Confidential submission: An EGC
may elect to submit a draft Form S-1
registration statement to the SEC
confidentially, rather than making a
public filing. In general, draft registration
statements submitted through the
confidential submission process are the
same as registration statements filed
outside of it. However, they need not be
signed or include the consent of auditors
and other experts, although the EGC must
provide a signed copy of the report of the
independent registered public accounting
firm with any submission. Confidential
submissions must be made via the SEC’s
EDGAR filing system with the tag “DRS”
or, in the case of subsequent submissions,
“DRS/A.” Once the initial public filing is
made, there is no need to file the prior
confidential submissions as exhibits, as the
EDGAR system will automatically make
those submissions public at the time of the
initial public filing.
Valuation update with the investment
bank: As is the case in traditional IPOs, it is
prudent to have relatively frequent valuation
updates with the investment bank.
(e) Weeks 7 to 8
Testing the waters: The EGC and its
advisors should consider whether to
engage in test-the-waters communications
with “qualified institutional buyers” or
“accredited investors” to gauge interest in
the contemplated offering of its securities.
In addition to helping the EGC gauge
investor interest in the offering, such
communications could provide valuable
information and experiences and impact
the crafting of the marketing story for the
impending roadshow.
Roadshow presentation: The preparation
of the roadshow presentation and the
roadshow itself is not notably different for
EGCs than it is for companies engaging
in traditional IPOs. Before finalizing the
key roadshow messages, the EGC has the
ability to take advantage of the testing-thewaters
provisions of the JOBS Act to help
further refine the roadshow messaging.
Discuss offering structure: The EGC and
the investment bank should determine if
there will be more than sufficient investor
demand for the contemplated offering
of its securities so that the EGC can
determine whether to make the decision
to publicly file the registration statement.
The EGC should also solicit interest from
selling shareholders on any potential
shares that they may want to sell as part
of the IPO in accordance with any notice
requirements to the shareholders.
(f) Weeks 9 to 13
Receiving and addressing SEC comments:
The SEC comment process for confidential
submissions takes a similar amount of
time as for traditional IPOs—with the
SEC taking approximately 30 days to
review and provide comments on the
initial submission. Subsequent rounds
of comments can take a range of time,
depending on the complexity of the issues
and additional disclosures included by
46 NYSE IPO Guide