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A company considering a public offering should thoughtfully evaluate its objectives, consider its alternatives and recognize the up-front and continuing costs of taking this step in its strategic plan.

Once the determination to undertake an IPO has been made, careful preparation will need to go into the launching process. An IPO is a seminal event in the life of a company and should be carefully planned in order to be effectively and successfully executed.

Thoughtful consideration will need to go into the makeup of the execution team, how you'll address legal, accounting and reporting issues and address various regulatory bodies.

This IPO training course addresses these topics from the standpoint of a CFO who has led four public offerings and provides detailed information regarding the accounting and reporting issues to be expected and also an overview of legal topics to be considered.

Intro Video Transcript

The IPO Process From a CPO Perspective Brought to you by Illumeo learning Hello everyone, welcome to another in a continuing series of webinars brought to you by Illumeo. Our topic is the IPO Process, and it’s from a perspective of a Chief Financial Officer. My name is Al Cochran, and I have led offerings in four separate public companies plus four in my career. Aside from an overview of the IPO Process we hope to accomplish these objectives today: That the company recognise that the IPO is not a destination but it’s the beginning of a new journey, and determine whether or not this new journey is actually right for the organization does it fit in with our long term strategic plans and if the answer to those questions is ‘yes’ realize that this is your process and you can and should control it. The deck that we’re going to be using today contains a lot of detail, I don’t think we’ll be able to get to all of the items in the deck but it is to be made available to you for your use as a reference as you undertake your own IPO journey. So, let’s time in shall we. I’ve written an outline here that has us begin with consideration of whether the IPO does align with the Company’s overall strategic plan. Try to answer the question – “What is our objective?” Pre Planning • Who are the members of the team to conduct an IPO • What does it take to be successful • What does a typical schedule look like • How does the company prepare itself • Are there any cautions we need to be aware of in making communications during this process And then we’ll get into the process itself Everything from the Kick-off meeting to the road show and we’ll be using some terms in our analysis that might not be part of your everyday vocabulary but hopefully by the end of the presentation you’ll be more comfortable with these terms. The Process: - Kick-off Meeting - Underwriting Agreement - S-1 Registration Statement - Jobs Act/EGC’s - SEC Review Process - Overview - “Cheap Stock” Issues - Directed Share Program - Road Show - NASD Review Process So when we turn our attention to- What are our Objectives? Liquidity: Other ways to accomplish Often filing S-1 becomes a “for sale” sign When a company thinks of going public often at the top of the list is liquidity, whether that is to allow existing shareholders monetize some of their investment, whether it’s to raise additional capital, or whether it’s to pay down some debt and de-level the balance sheet, liquidity is at the top of the list. But there are other ways to accomplish this liquidity without suffering a dilution, selling the 25-30 percent of the company. That’s typical when a company goes public and becoming then a registrant and being a part of that forever reporting regime, and regulatory regime that goes along with being a public company. It’s also quite common for filing and registrations table to essentially be a for sale sign that’s posted on the company, and in fact if that’s what the company would have in mind, the investment bankers will talk about a dual process. Where you file a registration statement but then you reach out to some potential inquirers to indicate what you desires might be, and as I say it’s not un-common at all for a company to file a registration statement but be acquired in the process and the registration statement never become effective. Marketing/PR: - Raises profile of Company - Sets in motion a permanent communication protocol with Markets and SEC Surely you will recognize that being a public company raises the profile in many organizations so there’s Marketing and Public Relations advantage to being a public company but it does set in motion a permanent communication protocol with the Markets and with the SEC, that some might think would out-weigh the benefits of marketing and PRS specs that we get as part of being a public company. Currency: - Use equity for acquisitions - Share-based compensation programs If an organization has a significant part of its strategy including mergers and acquisition and having stock available to do these acquisitions or having a currency if you will, certainly something to think about in being a public company, and also, the share-based compensation programs have more value or more perceived value in the hands of the employees if they can look in the Wall Street Journal everyday and see what potential value their option would be if they were able to exercise and sell on that day. So that currency aspect is important. What is our Objective? Consider the cost: - Dilution - Initial cost- money and time and process can be a distraction - On-going cost of being a public company can be significant: Professional Fees, D&O Insurance, Investor Relations, etc But once we’ve determined that these are the right objectives, and it does meet our long term strategic plan. The company needs to consider the cost, now I mentioned the dilution, it’s typical for an IPO to involve sale of 25-30 percent of the company to the public whether that is primary shares or in some instances a portion of that may be from existing distant shareholders which is termed secondary shares. But the dilutive effect of doing an IPO is something the existing shareholders need to come to grips with. There’s a significant cost both in money and in time and the process of undertaking an IPO can be a significant distraction to senior leadership rather than being involved with the things that generate revenue and run the company, you often tied up with changing happy to glad and registration statements, so it can be a significant distraction and they need to come to grips with that as well. There’s the on-going cost of being a public company which can be significant. There are Professional Theories for attorneys, for accountants, there’s D&O Insurance, the cost of Investor Relations program, and it’s not uncommon at all for a company say with a hundred and fifty million in revenue to have those cost on the order of not even one percent of revenue. Another thing that would cost me to think about is the success factors both in getting an IPO completed and then being a successfully public traded company, and I think about it in these terms. Success Factors: - Runway (does our industry have substantial market opportunity?) - Technology/ Service (are our Company’s offerings sufficiently differentiated?) - Culture (is our culture one that can thrive in the public arena while continuing to serve our customers?) - Financial institution sponsorship First of all, does the industry have enough runway is there a substantial market opportunity for the company and its competitors to all succeed? Or the company’s technologies, services, products all in the offerings, all in the nature that can be sufficiently differentiated in the marketplace to attract investors initially and to keep the company well positioned against its competitors in the long term. Another thing I think about is culture, in a new public company it’s often the case that the management whether its middle management or senior management begins to kind of get focused on what the share price is rather than, “are we doing everything that we should to serve our customers?” It’s very tempting to do so but it’s important that the company maintain the focus on what got them public to start with, and that’s taking care of the business, taking care of the customers. You do have a new constituency of stakeholders that you need pay attention to but not at the expense of serving customers and driving what make the business successful. And finally, we’ll talk a bit about Financial Institution and Sponsorship. All this in the interest of the capital market’s people from the investment banks is important in getting you to the public arena and then it kind of shifts once you’re public, into the research side and being able to cultivate relationships with those research analysis is important, and you’ll be able to recognise the level of interest in these financial institutions as a project company. Your phone will ring people will want to come to talk to you about the business, about where you are in the market, they’ll bring their obligatory deal book and talk about where you might be in relation to other companies, and then you may even e invited to the investor conferences and to speak on the private company tracks. So, that kind of attention is significant and important and represents the part that you’ve got to have in order to put together a strong deal team to complete an IPO. But as I say builds up a bit once you become public and you’re then cultivating relationships with the analysts because you want their continued support now that they can put you in front of new potential investors after your public company.

Course Series

This course is included in the following series:

10 CoursesFinance for Entrepreneurs

  1. Start-up Equity and Cap Table Basics
  2. Understanding Performance-Based Equity Awards
  3. Accounting 101: How To Do Basic Accounting In One Hour
  4. Learn Finance Principles in 1 Hour
  5. Financial Modeling Using Excel
  6. The Evolution of a Great Spreadsheet Report - How to Effectively Present Numbers in the Business World
  7. Creating a Winning Pitch for Venture Capital Investors
  8. Venture Capital Valuation Analysis Method
  9. Enterprise Risk Management 101
  10. The IPO Preparation Process - Preparing a Company to Access the Public Markets

Learning Objectives

  • Acquire an overview of the IPO process from conception to closing the offering
  • Be able to construct a plan to undertake execution of an offering.
  • Prepare to address legal, accounting and reporting issues which may be encountered.
  • Analyze the various regulatory bodies involved in a public offering and learn to effectively assist the IPO team in dealing with these bodies.

 

43 Reviews (117 ratings)Reviews

4
Anonymous Author
This is a good summary of the different stages and requirements of IPO. The speaker is good and very knowlegable of the topic. Though the actual IPO is a very long process, the speaker summarized it very well. This course is a good refresher for those who did IPO in the past and is helpful for those that will be undergoing an IPO.
4
Member's Profile
Slides were not numbered creating some difficulty in trying to search for key points related to exam questions. Instructor was not properly rehearsed resulting in an uneven pace for the slides that were presented. Otherwise, this was a good overview of the IPO process for anyone who lacks knowledge on this topic.
5
Anonymous Author
Although there are structural difference in rules and regulations between Tanzania and U.S. the course is very informative and extremely helpful. If you only adjust for regulatory disparities, the order and each component should be adopted by our CEO in Tanzania. Thank you very much.
5
Member's Profile
IPOs are such relevant activity for organizations. Mr. Cochran did an excellent job giving an overview of the preparation process. Having been through IPOs in the past, I can vouch that he covered the key basis. My compliments to Mr. Cochran.
4
Anonymous Author
Great information on how to effectively and efficiently conduct an IPO. I have never been part of an IPO process and it was interesting to learn all the things that need to occur for it to be successful.
5
Member's Profile
I liked the continuity of taking the IPO process, and explaining each aspect, step by step, from beginning to end. Explanations were thorough and provided knowledge of the process.
3
Anonymous Author
Need to put a lot of attention on what the presenter trying to say. Overall, the course is very informative which allow the public to understand how complex IPO process can be.
5
Member's Profile
This is a great synopsis of the IPO process, including the key regulatory considerations and planning elements. I highly recommend this course.
4
Member's Profile
Lots of info..perhaps a bit more than someone with limited exposure to this process previously is able to absorb in one sitting
5
Member's Profile
Excellent material - jam packed full of information and well presented too. My favorite course here so far.
3
Anonymous Author
The speaker sounds depressed & bored by his presentation...The slides have good & useful information though.
4
Member's Profile
This was a very good course. I learnt a lot. The instructor was effective, detailed and informative.
5
Anonymous Author
Lots of good information. Valuable for finance officers of companies looking to take the next step.
4
Anonymous Author
Excellent overview of the process. The right balance of overview and detail. Very helpful course.
2
Anonymous Author
Materials were fine. The lecture style was not inspiring.
4
Anonymous Author
good information, presentation could be more engaging
5
Anonymous Author
I like the overview, very informative yet succinct.
5
Member's Profile
Very good overview. All the info was relevant.
5
Anonymous Author
Very helpful in learning core IPO schedule.
5
Anonymous Author
Very interesting course on the IPO process.
5
Member's Profile
Informative and presented in a good format
5
Anonymous Author
Very helpful overview of the IPO process.
5
Member's Profile
Excellent overview of the IPO process.
5
Anonymous Author
Very information. Great background.
5
Member's Profile
Content was good, videos flowed.
5
Member's Profile
Thank you for the course...
4
Anonymous Author
Good content in this course.
5
Member's Profile
Very informative course
5
Anonymous Author
Great high level info!
4
Anonymous Author
Overall great course!
3
Member's Profile
Lots of information!
5
Anonymous Author
Great Information.
5
Member's Profile
Very Informative!
5
Member's Profile
Very thorough.
5
Member's Profile
good overview
5
Member's Profile
Great Lesson!
5
Anonymous Author
Great course
5
Member's Profile
Good course
5
Member's Profile
Good Class
5
Member's Profile
Amazing..
4
Member's Profile
Excellent
5
Member's Profile
Excellent
3
Member's Profile
ok course

Prerequisites

Course Complexity: Advanced

Prerequisite: Previous experience in corporate finance

 

Advanced Preparation: None

 

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 ext. 106, or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
The IPO Process
  15:18IPO Team and What it Takes
  8:03The IPO Schedule
  10:55Preparing The Company
  11:49Due Diligence and Communications
  12:03Underwriting Agreement
Conclusion
  8:30Other Considerations and Conclusion
Continuous Play
  1:15:17The IPO Preparation Process - Preparing a Company to Access the Public Markets
SUPPORTING MATERIALS
  PDFSlides: IPO Process
  PDFIPO Glossary/Index
REVIEW & TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM