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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
The IPO on-ramp under the JOBS Act the EGC. Comment letters and related correspondence for completed IPOs of EGCs are made public within a few months of the effective date of the registration statement. A Form S-1 registration statement and all prior amendments should be filed publicly with the SEC at least 21 days before the roadshow launch. Legal and other documentation: Lock-up agreements and Financial Industry Regulatory Authority (FINRA) questionnaires should be widely circulated to directors and officers of the company shortly before the public filing if the EGC and the underwriters have elected not to circulate those on a more widespread basis while the EGC was still submitting confidential drafts. Marketing strategy: Continue to consider engaging in test-the-waters communications. (g) Week 14 Finalize offering size and structure and convey valuation information to the SEC in order to resolve any issues regarding valuation of the EGC’s common stock in prior equity transactions, such as grants of employee stock options. (h) Weeks 15 to 16 • File a Form S-1 amendment with the red herring prospectus that includes price range and offering size. • Launch roadshow. • Price the IPO. • The next day, the EGC begins publicly trading on the NYSE, rings the opening bell and hosts other key marketing events associated with being a public company. • Close the IPO. While it remains to be seen how much of an impact the “IPO on-ramp” provisions will have on the number of issuers who prepare to go public, many traditional IPO practices are changing as EGCs take advantage of the ability to “test the waters” prior to their IPOs and the confidential submission process. Many EGCs are benefiting from being able to explore an IPO without disclosing confidential information to its competitors or the market generally, and avoid any embarrassment associated with pulling the IPO should the EGC do so. After EGCs have had a longer period of reporting as public companies, disclosure practices may continue to evolve. After only one year of life under the JOBS Act, EGCs may face pressure from investors to increase the amount of disclosure they provide, particularly in the areas of executive compensation. There may be more benefits in store for EGCs. The JOBS Act provides a plan for future changes to existing disclosure requirements to modernize and simplify the registration process and reduce the costs and other burdens associated with these requirements for EGCs for the purpose of further streamlining the registration process to making it more efficient and less burdensome for the SEC and for prospective EGCs. ● 4.4 Conclusion Fenwick & West LLP The JOBS Act has helped relieve some of the burdensome requirements smaller companies face in accessing the U.S. capital markets and made going public more attractive by reducing the associated costs and burdens for a period of transition while these companies grow. NYSE IPO Guide 47
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Contributor profiles NYSE IPO Guide
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Contributor profiles (SEC) register
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Contributor profiles The Children
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Contributor profiles KPMG 345 Park
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Contributor profiles Morrow & Co.,
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