1、IPOs: Is the Window Open?,May 18, 2010,NY2-672999,Panelists,Nicholas Pettifer, Americas Editor, IFLR Grant Miller, Managing Director - Equity Capital Markets, Cowen and Company, LLC David Ryan, Assurance Partner, PricewaterhouseCoopers LLP David Lynn, Partner, Morrison & Foerster LLP,Financing Envir
2、onment,2,U.S. Macro Economic Drivers,S&P / Case-Shiller Home Price Index,I. FINANCING ENVIRONMENT,U.S. Economic Growth,U.S. Unemployment,S&P 500 Earnings Power,Real GDP was positive for the third consecutive quarter in Q1 2010, growing at an annualized pace of 3.2%, as consumer spending rebounded to
3、 its highest level in three years After bottoming at 9.9x forward earnings in late 2008, the S&P 500 now trades at 13.7x twelve-month forward earnings Home prices were flat in February and are currently perched above their April 2009 low point after falling 30% from their July 2006 highs Initial job
4、less claims are down 3% since the beginning of the year and have fallen 32% since peaking in March 2009,Source: Bloomberg and FactSet as of May 14, 2010.,3,Euro Zone Debt Crisis Threatening Economic Growth,I. FINANCING ENVIRONMENT,“PIIGS” Intra European Lending Web,IRELAND,GREECE,ITALY,PORTUGAL,SPAI
5、N,EU Deficits as a % of GDP,Euro / US$ Exchange Rate,Source: New York Times, SeekingAlpha.,4,Equity Market Internals,Broad Market Volatility Since 2009,I. FINANCING ENVIRONMENT,Bear Markets Recoveries(a),Source: Bloomberg and FactSet as of May 14, 2010. (a) Based on number of calendar days from bull
6、 market peak to bear market trough.,Indices Since 2009,Sector Performance Since 2009,The Dow Jones Industrial Average has risen 19% since the beginning of 2009 and 63% since its March 2009 lows, representing the most powerful rebound since the epic crash of 1929 Though the equity market had rallied
7、recently, the recent spike in volatility and broad market sell-off left one sectors in the red (since the start of 2009) The VIX recently touched its lowest point since 2007 and despite recent sharply-increased volatility, overall recessionary concerns have ebbed and systemic risk in the financial s
8、ystem has dissipated,5,March Lows in Equity Markets,I. FINANCING ENVIRONMENT,Lower Volatility Enhanced Equity Financing Conditions,Source: ECM Analytics, FactSet and PlacementTracker as of May 14, 2010. Note: Excludes strategic transactions and deals with proceeds raised and market values below $5 m
9、illion.,Equity Financings by Product Type,NASDAQ versus VXN,Although the May 14th 32.9% increase in volatility represents the highest single-day spike since September 2008, news of the EUs financial support package stabilized recessionary concerns and will likely revitalize the equity financing mark
10、et,The equity financing environment has been particularly active since May 2009, corresponding with a narrowing of discounts as financial markets have rallied,8,IPO Market Activity,Source: ECM Analytics as of May 14, 2010. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. off
11、erings and offerings less than $10 million. Proceeds include over-allotment amount. Note: Growth sectors defined as aerospace and defense, alternative energy, consumer, health care, technology and telecommunications.,A. IPO,IPO Pricings, Filings and Withdrawals,SEC Registered IPO Volume,Despite subs
12、tantial improvements in the IPO market, recent lower-than-expected IPO pricings (relative to filing range midpoints) suggests that investors continue to take a disciplined approach to their deal selections and push for wider discountsThe one-year rolling IPO backlog has grown in recent weeks, with 7
13、 companies submitting their initial S-1/F-1 filings during the week ended May 14 and 10 IPOs expected to price prior to May 20,9,IPO Pricing Trends,Source: ECM Analytics as of May 14, 2010. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. offerings and offerings less than $1
14、0 million. (a) Based on number of pricings/filings. (b) Excludes life sciences offerings.,A. IPO,% Downsized / Upsized(a),Median % Returns,Pricing Dynamics(a)(b),The IPO pricing environment has improved since March 67% of IPOs since March 1st have priced within or above their ranges 70% of deals in
15、Jan-Feb priced below their ranges IPO pricing conditions remain situation specific, with investors pressuring valuations in cases where growth prospects are more binary Tech IPOs have priced well and generally traded up Pre-commercial biotech IPOs have struggled due to “clinical” risk of drug approv
16、al,10,IPO Structural Trends,Source: ECM Analytics as of May 14, 2010. Excludes closed-end funds, REITs, units, best efforts offerings, non-U.S. offerings and offerings less than $10 million. (a) “Small and Unprofitable” designation based on issuers that are not profitable and have less than $100 mil
17、lion in revenue for the most recent year end data at the time of IPO.,A. IPO,Number of IPOs by Market Cap,Number of IPOs by Sector,Number of IPOs by % Secondary,Number of “Small and Unprofitable” IPOs(a),11,U.S. IPO Activity 2010 Year-to-Date,A. IPO,Considerations in Deciding to Go Public,Access to
18、cash and capital markets for future financings and growth. Create a currency for future tax free acquisitions. Liquidity for investors (after lock-up period). Provide a vehicle for performance-linked employee compensation. Raise the companys profile and credibility with customers and suppliers. Pote
19、ntially maintain founder and management control of the companys future.,Considerations in Deciding to Go Public,Why you should go public:,Possible higher valuation if technology is strong but earnings potential is weak. More certain cash-out of existing investors. Avoiding time and cost of the going
20、 public process. Avoiding the burdens of living as a public company. Ability to keep things confidential. No need to fill out management team.,Considerations in Deciding to Go Public,Pre-IPO exit strategy as an alternative:,Going PublicAdditional Considerations,Upfront costs. Management timeboth bef
21、ore and after. Increased disclosure and reporting obligations. Corporate governance requirements. Trading restrictions on insiders and directors. Compliance costs. Public shareholdersactivism and litigation threats. Investor relations. Uncertaintylegislative and regulatory changes.,Launching a Succe
22、ssful IPO,Launching a Successful IPO,Get your corporate house in order before running up your costs: Assemble an experienced management team. Recruit independent members of the board of directors. Prepare necessary financial statements. Implement appropriate executive compensation policies. Clean up
23、 the capital structure. Organize corporate records, minute books and stock ledgers. Document material agreements. Adopt appropriate defensive measures. Identify potential issues earlyno surprises.,Launching a Successful IPO,Get your business in order before you get distracted by the IPO process Make
24、 sure your intellectual property is protected. Make sure your balance sheet is strong enough to withstand delays and expenses. Will your results be impacted by the focus of management on the IPO? Do your projections take into account the costs of being a public company? Address risk management and i
25、nsurance issues. Deal with potential “cheap stock” issues.,Launching a Successful IPO,The Business of being a public companyact like a public company, starting now! Does your board look and feel like a public company board? Are your internal controls adequate for public company requirements? Will yo
26、ur executive compensation programs and policies withstand scrutiny? Are there related party transactions that must be eliminated? Are you prepared to deal with public stockholders?,Launching a Successful IPO,Five ways to make your IPO a success:,Every team needs a captain that plays the whole game.
27、Dont hold your organizational meeting until people have seen a good draft of the business section of your prospectus. Know what kind of shape your financial statements are in, and develop reasonable expectations about when the audit will be completed. Establish a realistic timetable that involves no
28、 more drafting sessions than are really required. Avoid surprises.,IPO Valuation and Structure,IPO Example #1: GTEC,13,Global Defense Technology & Systems, Inc. (GTEC) Overview,A. IPO EXAMPLE #1: GTEC,Global Defense Technology & Systems, Inc. (GTEC) provides mission-critical technology-based systems
29、, solutions, and services for national security agencies and programs of the U.S. government The Companys services and solutions address counter-terrorism and intelligence analysis, command, control and decision support systems and solutions for the design, engineering and integration of highly mobi
30、le mission support system Globals objective was to create a liquidity event for certain insiders and their parent company GLOBAL while using the remaining proceeds raised from primary shares to de-leverage the Companys balance sheet,Situation Overview and Objectives,Transaction and Marketing Highlig
31、hts,Consensus Estimates,Global filed its S-1 on September 1, 2009 and launched its roadshow on November 9, 2009 Management marketed for 9 days in 13 European and U.S. cities, with 48 investor one-on-ones and 7 group meetings Represented the first defense services IPO since SAIC in October 2006,14,GT
32、EC: Valuation Driven by EBITDA and Earnings,Comparable Company Valuation (US$ in millions, except per share data),A. IPO EXAMPLE #1: GTEC,15,IPO Valuation,A. IPO EXAMPLE #1: GTEC,(a) Includes $12.6 million in term loans, $8.6 million drawn on line of credit, $0.3 million deferred interest and $0.1 m
33、illion of cash as of December 31, 2008.,Marketing Range (US$ in millions, except per share data),2010 EBITDA IPO Valuation (US$ in millions, except per share data),16,Global Defense Technology & Systems, Inc. (GTEC) $62.9 Million IPO,A. IPO EXAMPLE #1: GTEC,Transaction and Marketing Highlights,Trans
34、action Overview,Multiples at Pricing(a),(a) Comparable Companies include: CACI International, ICF International, ManTech, NCI, SAIC, SRA International and Stanley.,Global priced a full size offering at $13.00, or 7.1% below the low end of the rangeThe offering was well-received by investors The orde
35、r book was almost 1.5x subscribed 25% of conference calls/meetings resulted in ordersNCI Inc, one of Globals closest comps, traded down (6.1)% the day before pricing and (7.3)% over the marketing period creating an additional challenge in pricing the deal,17,GTEC: Current Valuation Compared to Compa
36、rables,GTEC Valuation (US$ in millions, except per share data),A. IPO EXAMPLE #1: GTEC,IPO Example #2: ALIM,19,Alimera Sciences, Inc. (ALIM) Overview,B. IPO EXAMPLE #2: ALIM,Alimera Sciences, Inc. is a Phase III biopharmaceutical company developing ophthalmic pharmaceuticals focused on diseases affe
37、cting the back of the eye, or retina Lack of effective treatment for retinal damage creates large market opportunity for Alimera Alimeras lead product Iluvien potential to be first drug approved for Diabetic Macular Edema (DME) Phase III data in DME in hand at the time of IPO; revenues beginning in
38、2011 There were six Iluvien trials ongoing at the time of the IPO, as the Company evaluated the drugs use in the treatment of a variety of ophthalmic diseases Wet age-related macular degeneration (AMD), dry AMD, and retinal vein occlusion (RVO),Situation Overview and Objectives,Marketing Re-Cap,Fina
39、ncials,Alimera filed an amended S-1 on April 9th, signaling they were planning to offer 6,000,000 shares in a range of $15-$17 Management marketed for 10 days in 12 European and U.S. cities, with 57 investor one-on-ones and 4 group meetings,1,Alimera Valuation Based On Various Methodologies Summary(
40、a),Alimera Valuation Based On Various Methodologies Summary (US$ in millions),(a) Supporting schedules on following pages. (b) Value discounted back 1 year at 25%.,20,ALIM: Valuation Driven by Revenue,B. IPO EXAMPLE #2: ALIM,Comparable Company Valuation (US$ in millions, except per share data),22,Hi
41、storical Analysis of Companies With Phase III Data(a),B. IPO EXAMPLE #2: ALIM,Historical Analysis of Companies With Phase III Data (US$ in millions),(a) Includes Companies with Phase III data announcements. Pre-Money Enterprise Value based on day after final Phase III data announcement. (b) Cash and
42、 debt figures as of October 21, 2009 per Alimera Sciences Management. (c) Represents the day after Phase III data announcement. (d) Represents the companys stock price one day after their Phase III data announcement.,Historical Analysis of Companies With Phase III Data (US$ in millions),7,IPOs of ND
43、A Stage Companies 20042010 YTD(a),IPOs of NDA Stage Companies 20042010 YTD (US$ in millions),(a) Includes NDA stage companies at time of IPO. (b) Cash and debt figures as of October 21, 2009 per Alimera Sciences Management.,IPOs of NDA Stage Companies 20042010 YTD (US$ in millions),23,Alimera priced
44、 a full size offering at $11.00, representing a 26.7% discount to the low end of the range Insiders contributed $20 million to the order book, helping the Company achieve a minimum proceed thresholdInvestors placed a lower than expected valuation on Alimera due to the pre-commercial status of its le
45、ad product and current lack of tangible revenue The Company was marketed as prepared for an NDA filing imminently, with an FDA decision on Iluviens approval status pending,Alimera Sciences, Inc. (ALIM) $72.0 Million IPO,B. IPO EXAMPLE #2: ALIM,Transaction and Marketing Highlights,Financials,Multiple
46、s at Pricing(a),The IPO Process,Outside LawyersWhat Do They Do?,Company counsel Pre-IPO housekeeping and preparation. Prepare the company for due diligence process. Legal requirements. Manage drafting. Submit filings and responses to SEC. Post-IPO obligations and disclosure.,Underwriter counsel Cond
47、uct due diligence. FINRA filings. Assist in drafting.Selling stockholder counsel Legal opinion. Selling stockholder documentation.,6-12 months before IPO,Company rounds out management team (if necessary); focus on “corporate cleanup”,Company formally decides to do IPOappoint underwriterpublicity res
48、trictions commence,4-6 months before IPO,due diligence prospectus drafting adopt public co. policies/ controls/ procedures if not done already complete audit and review of interim financials corporate governance matters,3-6 weeks before first SEC filing,file Form S-1 with SEC and submit application
49、to exchange file confidential treatment request, if necessary,receive first round of comments from SEC,respond to 2nd (and 3rd, 4th and 5th) round of comments from SEC,4 weeks after filing,Comments at 2-4 week intervals,resolve material SEC comments listing approval bulk print preliminary (“red”) prospectus,road show,price deal commence public offering,print final prospectus and close offering,Typically 3-5 months after first filing,Initial filing,resubmit revised S-1,1-2 weeks after receipt of comments,
