considerations for a us ipo listing

Considerations for a US IPO listing

6 March 2014


Disclaimer

► This material has been prepared for general informational

purposes only and is not intended to be relied upon as

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refer to your advisors for specific advice.

► The views expressed by the presenters are not necessarily

those of EY.

► This presentation is © 2014 EYGM Limited. All Rights Reserved.

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please visit ey.com.


Today’s moderator

Jackie Kelley Partner, Ernst & Young LLP

EY Americas IPO leader

#EYIPO Join today’s Twitter discussion:


Today’s panel

Howard Morgan

First Round Capital

Partner

Todd Sloan

Tremor Video

CFO

Mary Klein

Ernst & Young LLP

Partner, In bound IPO FAAS Leader

Richard Rosenstein

SFX Entertainment, Inc.

CFO

The information contained herein is a summary in nature. Viewers should consult their own professional

advisors to address their individual circumstances and concerns.


Today’s agenda

► IPO Strategy and communication

► Establishing public company governance

► Core areas of focus for a successful IPO



Polling question

For those of you planning an IPO, what is your timeline?

A. Planning an IPO in 2014

B. Planning an IPO in 2015

C. Thinking further out

D. Not sure but interested in learning more about the process

E. Does not apply (EY, faculty, other)


The US IPO market was the most active since 2004

Source: Dealogic, Thomson Financial, EY research

$50 $38 $44 $50 $27 $27 $43 $40 $47 $62

238

208 204 214

34

65

162

124 133

226

0

10

20

30

40

50

60

70

0

50

100

150

200

250

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Pro

ceed

s (

US

$ b

)

Nu

mb

er

of

IPO

s

Proceeds (US$b) Number of IPOs

The US IPO market was supported by better economy, bullish

equity market, low volatility and strong PE/VC backed exits


Today’s agenda






Setting the capital raising strategy Key considerations in going public

► How strong is my growth/equity story?

► Do we need capital to grow?

► Do investors want liquidity?

► Is my business predictable?

► Are IPO deal valuations strong?

► Is my business sufficiently mature?


IPO

Destination

Availability of

analyst expertise

Investor base

and attention

Valuation level of

comparable companies

Trend: listings

of comparable companies

Peer

companies

Language and culture

Prestige and critical mass

of the marketplace

Brand recognition

potential

Participation

in indices

Scope of capital

market regulations

Strategic fit:

• Consumers

• Growth markets

Speed of approval process

Liquidity on the

stock exchange

Total flotation

and ongoing

post-IPO costs

Initial and ongoing

stock exchange requirements

Legal and market risks

Currency:

• M&A target market

• Financing growth

America Asia

Pacific

Ho

me

mark

et

EM

EA

IPO on the international stage Why, where and when to go public?


Polling question

When listing on the US exchanges, what are the most

important criteria for selection? (select all that apply)

A. Competitors are listed on the exchange

B. Better valuation

C. Ongoing stock exchange requirements

D. Interested in learning more about the different options



Benefits of listing in the US

► Brand recognition

► Diversity of companies

► Liquidity

► Cross-border listing opportunities

► High-tech trading platforms


Setting the IPO agenda Communicating with key stakeholders

Who owns the IPO strategy?

Who are the key internal/external stakeholders?

Who is driving the communications?

Executive

leadership Customers Vendors

Employees Key

stakeholders Regulators

Investors Analysts Creditors


IPO critical success factors

CEOs/CFOs of those outperforming companies noted critical success factors: ► IPO is a transformational process and not just a financing event

► Systematic implementation of new programs, policies and systems common to public companies

prior to the IPO

► Implementation of pre-IPO improvement initiatives at least one to two years prior to the IPO

► Ensuring competitive advantage as measured by both financial and non-financial metrics

EY’s Measures that Matter study was a survey of more than 100 companies and

400 institutional investors

Study shows that only a small percentage of IPOs go on to outperform

the market in the first three years following the offering.

Lessons learned

Results


Top IPO readiness considerations

► Preparing for the journey

► Keeping your options open

► Timing the market

► Building the right management and advisory teams

► Building your business and financial processes and

infrastructure

► Establishing corporate structure and governance

► Managing investor relations and communications

► Delivering an effective road show

► Attracting the right investors and analysts

► Delivering in your promises


Today’s agenda






Polling question

What is the status of your board? (select all that apply)

A. Ready to be public

B. Need to establish structure

C. Need to find new members

D. Not sure, need to learn more about what the board should

be comprised of



Since the financial crisis of 2007–2008, US exchanges have been the preferred market for cross-border IPOs

Number of IPOs Capital raised (US$b)

* Foreign listings is where the domicile of the primary exchange (or the secondary exchange for dual listings) differs from the listed company domicile. For dual listings,

all funds are allocated to the primary/foreign stock exchange.

Source: Dealogic, EY research

2009–2013 top stock exchanges for cross-border listings*

143

88

30 30

0

50

100

150

200

NYSE andNasdaq

London(Mainboard and

AIM)

Hong Kong(HKEx)

Singapore (SGX)

$37

$25

$18

$8

$0

$10

$20

$30

$40

NYSE andNasdaq

London(Mainboard and

AIM)

Hong Kong(HKEx)

Singapore (SGX)

China, 55%

Israel, 6%

UK, 5%

Greece, 3%

Canada, 3%

25 other countries,

28%


Board governance for IPO-bound companies

IPO companies have an opportunity to enhance board governance in four

key areas:

► Independent board leadership

► Director elections

► Board composition

► Ownership structure

EY will be releasing a study on Board governance of recent IPO companies

Study shows that IPO companies have less mature board

governance practices

Findings

Results


Today’s agenda






Polling question

Have you assessed your company’s IPO readiness? (select

all that apply)

A. Yes

B. No, we have not but are planning to do so

C. Not yet, still in the process of learning if an IPO is

the right strategy

D. Does not apply (EY, faculty, other)


Preparing for an IPO Act like a public company before the IPO

Business case for

investment

Develop a compelling investment story, sound business, predictable

growth trajectory and clear use of IPO proceeds for growth

Financial results Demonstrate strong operating performance, balance sheet and positive

cash flow over several quarters, and several years of strong, steady growth

momentum and rising profits

Accounts and information

systems

Establish timely and reliable financial information, appropriate IT systems

and a robust financial planning and analysis, enabling availability of

concise management information

Internal controls and

reporting

Establish a robust internal control structure and financial reporting

processes

Management

and external advisory

team

Put a team in place with a proven track record and the experience to

undertake the IPO event and operate a public company

Corporate governance Establish a strong governance structure, including independent board and

clear, transparent shareholder/corporate structure

Investor relations Place an expert to drive an effective communications strategy, manage the

public spotlight and send effective messages to investors and analysts


One-minute recap


Resources

►EY’s guide to going public

►Make sure you have your

SOX house in order

►Right team, right story, right price

► Connect with us: ►ey.com/ipocenter

►EY_Growth


[email protected]

+ 1 212 773 1803

[email protected]

+ 1 212 201 0311

[email protected]

+ 1 646 561 6378

[email protected]

+ 1 949 437 0237

[email protected]

@jackiekelleyEY

Contact us

Todd Sloan

Tremor Video

Mary Klein

Ernst & Young LLP

Howard Morgan

First Round Capital

Richard Rosenstein

SFX Entertainment, Inc.

Jackie Kelley

Ernst & Young LLP


Looking for even more information on taking your company public?

EY IPO and Strategic Transactions Conference: guide

to going public in today's marketplace

Geared toward CEOs and CFOs of pre-IPO companies

May 28, 2014

11:30 a.m. – 5:00 p.m.

Metropolitan Pavilion

New York City

For more information, contact [email protected]


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