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Arie Kravtchin Director of Investment Banking, Bank of America Merrill Lynch Roadmap to SUCCESSFUL Case study from Eduson.TV course IPO

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Arie Kravtchin

Director of Investment Banking, Bank of America Merrill Lynch

Roadmap to

SUCCESSFULCase study from Eduson.TV

course

IPO

appropriate time to launch an IPO

It is important to choose

The important factors are barriers to entry, state of

the securities market and the region’s economy upon

the whole. Sometimes, the conditions are such that it

makes sense to postpone IPO. Foe example, in the

summer of 2013, the management of Azul Brazilian

Airlines decided that the market conditions were too

unfavorable - Sao Paulo stock exchange index dropped

by 18% and the prices of their competitor’s stocks

dropped by 35%. Therefore, the planned IPO was

postponed for an indefinite term.

appropriate time to launch an Ipoit is important to choose

must be started

Preparation for IPO

«long before»

Usually, the entire process takes from 3 months to 1

year. It generally depends on the company’s

preparedness level and, above all, on the availability of

audited financial statements for the last three years

of work.

must be started «Long before»preparation for IPO

for organizational

be prepared

expenses

for organizational expensesbe prepared

On average, a company spends more than $1 mn when

preparing to IPO (listing fee, legal and financial

consulting, etc.). As soon as stock trading begins,

expenses become even higher - $1.5 mn on the

average (for audit, Board of Directors, new personnel,

PR, etc.).

successful IPOs

you should look up to the experience of

in the current year

The factors that operated to the advantage of the

IPOs when they were launched will most probably be

relevant for your company, too: investors’ readiness to

risk, interest towards your sector of industry, etc.

Of successful ipos in the current year

You should look up to the experience

thoroughly

Choose your book-runner

The organization to be engaged in public offering

(which is often an international investment bank),

should have appropriate experience and relations with

potential investors. This will help create a demand for

company’s stock offering. Naturally, the book-runner

must not at the same time provide the same services

to your competitors.

thoroughly

choose your book-runner

a right IPO amount

it is important to set

Large-scale transactions more often attract a larger

number of investors, especially big ones. At the same

time, it may be more difficult for the management and

book-runners to create a high demand at the stage of

book building.

a right ipo amount

it is right to set

of the company

collect expert opinions

Investors highly rate the company assessment by

outside specialists: how well the company is managed

and whether the business plan is viable, what the IPO

goals are, whether there are any competitive

advantages and whether the company’s sector is

growing.

of the company

collect expert opinions

Perform the due

diligence

Clarity of the company’s business scheme and of its

assets structure is not only required for defense

against tax and other claims. An impeccable

reputation will attract investors that are not

inclined to risk.

perform the due

diligence

the investors before

the management is to meet

ipo and impress

Direct contact is crucial for the company’s promotion.

Therefore, you should perform «rehearsals» of

presentations during the road-show and thoroughly

plan your behavior strategy.

the management is to meet

the investors before

ipo and impress

an independent director

The board of directors should include

A skilled specialist, unconnected with the company,

who defends the interests of minority shareholders,

will attract investors and upvalue the company in their

eyes. However, to find a «right» person is sometimes

very hard.

an independent director

the board of directors should include