April 2021

IPO Services from evaluation to execution

Deloitte 2021 2

An IPO truly is at the DNA of your company – requiring well-orchestrated capacities andresources - We accompany your IPO from evaluation to execution

Your IPO journey

Equity story & Listing location

IPO financials

IT systems & dataGovernance framework

Functional IPO Readiness

IPO Program Management

Target corporate structure

Historical financials Forecast / Business plan Segmentation Pro-forma financials KPIs Prospectus

IPO vehicle & group structure Equity carve-out / spin-off

preparations Legal & tax structuring Target investor group

Monetisation Regulatory hurdles

Corporate Governance Code Risk management Internal control systems Compliance management Internal audit

Sustainability

ERP system assessment Cyber security Disaster recovery Digital platforms

Corporate social responsibility

ESG strategy & reporting

Target operating model per function (Day 1 & 2)

Supply Chain, Production, etc.

Capital market reporting

Investor relations

Get listedExecute inter-disciplinaryIdentify hurdles & plan remediationKick-off Pre-IPO Lab

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IPO strategy and equity story

Almost all companies needed to develop theirequity story further including consideringsupporting KPI’s, peer group comparison andarticulating how the story and use of proceedswill drive value

Business plan and forecast model

c.80% of the companies we reviewed needed todevelop their forecast model for the IPOprocess and to support the directors’ ongoingobligations once the company was listed

Corporate and debt structure

Over half of companies reviewed needed toconsider complex restructurings as part of anIPO whilst debt refinancing is often a keyconsideration, particularly for PE-backedcompanies

Executive remuneration

Two thirds of companies reviewed had notconsidered their executive remuneration andproposed incentive structure post IPO

Team For >80% of companies we identified the needfor additional resource either for the IPOprocess or to meet the ongoing obligations of alisted company

Financial track record and reporting

>75% of the companies we reviewed needed toundertake significant work to prepare their trackrecord with c.70% of the PE-backed companiesreviewed having complex track records toconsider due to the acquisitions they had made

Management reporting

>75% of companies reviewed needed toenhance or refocus their management reportingto be appropriate for a listed company

Internal controls

Nearly all companies needed to enhance theircontrol environment pre-IPO in some way, withover 80% needing to improve theirdocumentation of the existing controlenvironment

Corporate governance

The vast majority of companies needed todevelop their corporate governance to beappropriate for a listed company. Areascompanies needed to consider ranged fromboard and committee structures to specific newpolicies required as a public company

Timeline Every IPO readiness exercise identified criticalpath actions that needed to be undertaken

Lessons learned

Why evaluating IPO options is key

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Start small, think big: IPO roadmap validation

Pre-IPO Lab

The Pre-IPO Lab is an interactive workshop and white-boarding

session - organized and moderated by Deloitte, held as a physical

or virtual one-day session – to gain a common understanding of

your current situation and to high-level identify challenges to

prepare for an IPO

Our multi-disciplinary team provides the knowledge and jointly

with you determines the IPO readiness status across key areas

Summary report for Pre-IPO Lab documents, approach,

discussions and results around the selective IPO focus topic

The Pre-IPO Lab is based on the IPO framework, using a tool-based

questionnaire, and providing a gap analysis between current status

(“as-is”) of the IPO candidate and best practices (“to-be”)

The IPO candidate’s readiness level is being reflected in a Pre-IPO

score, which takes into account required time and resource

requirements, process complexity and interdependency of IPO topics

as well as the individual readiness level of the IPO candidate

Pre-IPO Lab heatmap provides a summary of the high-level analysis of

IPO readiness by focus area and is composed of four quadrants, which

prioritize IPO preparation requirements, by classifying it as hot

topics, focus topics with high process impact OR a high time or

resource need, and (4) further topics with low impact

Mitigating actions resulting from the gap analysis are translated into a

first high-level IPO roadmap, taking into account individual

workstream requirements and process interdependencies

First touchpoint - define key areas & participants

Set up high-level Information Request List

Pre-filling of checklists per each function

Conduct Pre-IPO Lab

< 3 weeks before

Initial analyses and internal research

< 2 weeks before

< 1 week before

Lab preparation

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Deloitte.Engine is a holistic tool for analysis alongside all financial dimensions of an IPO and developing a roadmap going-forward

IPO technology

• Establish a central database containing multi-dimensional financial information for each segment, activity level, required consolidation and elimination adjustments and the entire business

Data Cube

• Design and evaluate different IPO & deal perimeter (scenarios)

• Allow instant sensitivities

Full flexibility

• Full transparency on preparation process

• Documentation for internal/external review & audit purposes

• Support and fulfill reporting requirements on Day-1 (interim reporting)

• Support your equity story

• Financials for prospectus (IPO)

• Support your M&A “dual-track”

• Structure your IPO journey

• Prepare IPO readiness assessments

• All workstreams use the same financial data set, tailored to needs (“one source of the truth”)

• Prepare combined/ carve-out financials for IPO candidate

• Consider financial rationale (revealing hidden reserves)

Deloitte.Engine IPO

Combined

Financials

Reporting

Prospectus &

M&A dual-track

• Set up IPO work streams

• Track roadmap progress

Execution

Transparency & documentation

IPO preparation & execution

IPO readiness

Collaboration & tracking

Financial Matters

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Unparalleled experience in IPO processes

Selected references

DAX30

Financial & operational Carve-out

|SMO |Valuation

DAX30

Financial & operational Carve-out

|SMO |Valuation | IPO program

Fortune Global 500

Financial & operational Carve-out

|SMO |Valuation| IPO program

Listings German companies

• Carve-out and IPO of the global truckdivision of a German automotive OEM

• Deloitte. providing programmanagement, IPO readiness, functional& operational support to preparecompany for IPO, supporting on carve-out financials & preparation of a ValueDriver Model (sensitivities) inDeloitte.Engine, advising on strategicoptions (M&A, JV, IPO), IFRSadjustments, combined financials,valuation

• Spin-off of a major division of a globalautomotive supplier – IPO envisaged

• Deloitte. providing Global SeparationManagement Office, functional &operational support to preparecompany for carve-out/spin-off anddirectionally for IPO, supporting oncarve-out financials; advising onstrategic options (M&A, JV, IPO) andvaluation

• Envisaged carve-out and IPO of a majorbusiness of a global mobile networkoperator

• Deloitte. providing Global SeparationManagement Office; functional &operational support to preparecompany for IPO, supporting on carve-out financials / data migration /prospectus financials withDeloitte.Engine; advising on strategicoptions (M&A, IPO) and valuation

Equity carve-out Equity carve-outSpin-off

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Deloitte Germany

Capital market experts

Oliver is a Financial Advisory Partner and has 20years of experience in global M&A transactions,such as divestitures, carve-outs as well as IPOprocesses. He focused on innovative solutionsfor the preparation and execution of large andcomplex M&A projects and invented the end-to-end database tool Deloitte.Engine: designedto evaluate strategic options, compile financialinformation and track progress

Mobile +49 151 5800 3816skunasingam@deloitte.de

Sarah is a Senior Manager based inDuesseldorf and has more than 12years of experience in M&A andcapital market transactions, includingIPOs, carve-out and integrationprojects. Sarah is leading the IPOoffice and your point of contact

Sarah Kunasingam

Mobile +49 173 878 0135orattka@deloitte.de

Oliver Rattka

iposervices@deloitte.de

Assurance | Financial Advisory | Risk Advisory | Tax | Legal | Consulting

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Appendix

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Define IFRS segmentation

Communication & change mgmt.

Track progress, manage interdependencies, escalate issues, support decision-making

Typical high-level IPO Roadmap

Evaluate & Assess Execute Sustain

IPO Readiness IPO

Monetisation

IPO Program Management

IT Systems & Data

Functional IPO Readiness

Target Corporate Structure

Financials & Reporting

Governance Systems

Develop / adjust Equity Story

Execute Target Operating Model

(e.g. IR department, internal & external reporting)

Filing ProcessDue Diligence & Prospectus Preparation

Prospectus Approval

Regulator submission

Define Target Corporate Structure Register legal conversion

Prepare governance structure and board development

Prepare & audit financial statements

Prepare & audit IFRS group financials 3yrs historical F/Se.g. H1 FY figures

IFRS audit reports Comfort Letter

Understand IT landscape

and IT risk areas from an

end to end perspective

Cyber maturity

assessment

Improve cyber maturity where required to address

going concern risks

Pre-IPO Lab

Analyst presentation

Book

Building

Roadshow

First day of trading

Filing Process (regulator)

Define Target Operating model

(to-be state) and analyse gaps

Certification session

Certification session

Go-Live & Hypercare

Set-up PMO &

Steering

committee

IPO Program Kick-offDevelop IPO

roadmap

Develop project plans

per workstream

Declaration of

compliance

(§ 161 AktG)

Town hall meeting

CMS descriptionIntermediate IA report

Risk/ control documentation

Prepare analyst presentation

audit reports

Decide on legal target structure

Preparation of legal conversions (statutes & boards)

IPO target / Deloitte IPO target and / or other (Deloitte support) Other / external support (e.g. banks / lawyers)

Assess status and

maturity

Risk based

scope

Detailing risk management, internal controls and

compliance management, internal audit

Conduct training

of stakeholders

Conduct dry-run, effectiveness

assessments and remediation

Deloitte Framework

Prepare for non-financial reporting (ESG, sustainability) Prep Annual report

(“Geschäftsbericht”)

illustrative

Discuss Target Capital Structure

Discuss “comply or explain” reg. GCGC

items Consider GCGC items & define strategy

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…

A central PMO coordinates across a series of IPO readiness pillars & objectives while stillmaintaining rigor in running the business

IPO Program Management Office

Steering committee provides resources and guidance to the teams, provides subject matter input and resolves issues

IPO Leader coordinates master planning, progress monitoring and resolve issues as well as manages the IPO process, including investment banking process and registration documents

IPO PMO handling timeline, dependencies, decision gates, budget, resources as well as executive/ BOD updates

Country 1

…

Country n

• CEO / CFO IPO target

• Shareholder representatives

Steering Committee

Functional Workstreams (departments)IPO Workstreams

Support/Tracking

• IPO Program Lead

• Further project managers (as required)

IPO Program Management

Supply

chain

Commercial HRFinance

(Accounting,

Controlling,

Tax)

Strategy &

Investor

Relations

IT LegalFunctional

Readiness

(Target

operating

model)

Monetisation Target

Corporate

Structure

IPO

Financials

(Prospectus)

Governance

Systems

IT Systems &

Data

IPO meeting cadence

to be defined

illustrative

Coaching/Support

External support

• Investment Bank / Book Runner

• Financial, legal and further advisors

Support

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How to test market interest and benefit from a competitive process?

Dual-track process

M&A

IPO

Start Dual-track processThe M&A process typically kicks-off 3-6 months prior the envisaged listing – whilst IPO preparations will continue “full speed ahead” to keep both options viable

Start IPO preparation

„Sell or

Based on interest received from M&A process versus expected proceeds from book-building - typically few

weeks before envisaged IPO date

Due diligence phase with potential M&A investors

Due diligence performed by underwriters/lead banks

Lead banks for the M&A and IPO process typically are the same and can leverage on the understanding of the target and investors documentations prepared about the target, e.g. populated virtual-data-room, draft prospectus etc.

Pros Price guidance from M&A to IPO process

and vice versa – competitive process Disciplined timeline for potential buyers Increased deal certainty due to multiple

exit options

Cons Increased requirement for resources &

capacities, in particular at management level

Selection of listing location & segment, type of IPO

Executing an M&A transaction process in parallel to the IPO preparation is a viable option…

float“

decision

…to preserve flexibility, drive value and mitigate uncertainties from external factors

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German / US listing – selected stock exchange segments

Listing location (1/2)

*) According to § 161 of the German Stock Corporation Act, the BoD and supervisory board of a listed company must submit a declaration of compliance annually. In it, they must explain whether, and to

what extent the recommendations of the German Corporate Governance Code "have been or will be complied with"; Source: Deutsche Börse and NYSE

Stock Exchange SegmentsFSE (Germany) NYSE (USA)

Foreign Private IssuerPrime Standard General Standard Scale

Pre-requisites for admission

Accounting Standards IFRS IFRS German GAAP or IFRS US GAAP or IFRS

Reporting history3 years of audited financial

statements3 years of audited financial

statementsCompany history of

>2 years2 years of audited financial

statements

Required Documentation EU Prospectus (BaFin) EU Prospectus (BaFin) EU Prospectus (BaFin) US Prospectus (SEC)

Min. market capitalization €1.25m €1.25m €30m $100m

Min. number of (floated) shares 10,000 shares 10,000 shares - 2.5m shares (worldwide)

Min. free-float 25% 25% 20% -

Follow-up obligations

Annual consolidated Financial Statements

within 4 months

(GCGC: 90 days)within 4 months within 6 months within 4 months

Half year reportwithin 3 months

(GCGC: 45 days)within 3 months within 4 months Within 6 months

Quarterly reportingwithin 2 months

(GCGC: 45 days)no no

no, unless the FPI makes them publicly available outside the US

Risk early warning system yes yes yes yes

Reporting Calendar yes no yes yes

Corporate Governance Code Required* Required* VoluntaryRequired (US Corporate

Governance Code)

Yearly analyst conference yes no yes yes

Language English and German German or English German or English English

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US Stock exchange – listing requirements for foreign private issuers

Listing location (2/2)

Some foreign companies that conductIPOs in the United States are called“foreign private issuers (FPI)” underthe federal securities laws

An entity classifies as an FPI if it:

– is a corporation or otherorganization incorporated ororganized under the laws of anycountry outside the US;

– is not a foreign government;

– passes the (i) Non-US ShareOwnership Test or (ii) Non-USBusiness Connection Test

FPI status is tested annually

If foreign issuer qualifies as FPI, thereare certain accommodations asdepicted in the adjacent table

Without FPI status, an entity will beregulated like a US domestic company

Nevertheless, even applying foraccommodations, processes might takelonger and require more resources andcapacities if FPI is not familiar with USSEC regulations

Foreign Private Issuer

Outside US

Same registration &

reporting forms as

for domestic issuers

annual testtest

passed

test failed

Accommodations*

Area foreign issuer domestic issuer

Filing Form F-1 – comprise certain F/S (e.g. if FPI cannot provide first 2yrs of the 5yrs. period those are omitted) and disclosure (e.g. compensation as aggregate number only) accommodations –nevertheless, underwriters often push FPIs for a prospectus look similar to that of a domestic issuer

full S-1 form

Audit Audited B/S for most recent 2yrs. under US-GAAP or IFRS (issued by IASB) or local GAAP reconciled to US GAAP

US-GAAP only

Corporategovernance

Exemptions on audit committee independence rules

Post IPO filings

Form F-20 – annual report within 4 months after fiscal year end; officer certification on SOX needed; F-6K (material information); forms to be provided in English language or English summary of documents in foreign language

F-10K (annually)F-10Q (quarterly)F-8K (current reporting)

*) not exhaustive – need to be analyzed in detail

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