1. Product/Service: Assumption-Product/Service is desired by the marketplace 2. Financials: In the case of a private company considering going public, it is advisable to have 3 years of past corporate financials (actual or restated to remove private perks) audited by a credible, preferably well known accounting firm. Who are your experts? If you are relying on someone who says he can do it, you should consider bringing in an executive who has IPO experience and can enhance the value of the deal, paying for his cost of acquisition many times over. 3. Market Timing: Be cognizant that the market for IPOs is not always available and you may have to accelerate or postpone an offering. 4. Projections: When searching for an investment banker/venture firm or underwriter, it is necessary to develop a business plan with forward projections such that the investors can estimate the future value of the business and thus realize a return on their investment. 5. Negotiations with Underwriter: When negotiating with the underwriter the objective should be to raise the amount of capital needed, and justifiably required, to grow the business. The next objective should be to give up the least percent of ownership to the IPO (usually less than 50%). The underwriter should be confident that they can retail the offering on an "all or nothing basis". 6. Legal/Red Herring: Before proceeding with the red herring, which is the preliminary description of the IPO excluding price of the shares to be offered, it is important to have selected a law firm that has IPO experience such that the red hearing will contain the proper legalities in harmony with the technical input supplied by the company. 7. Depth of Management: RSA Executive Search is experienced with the IPO process and can help entrepreneurs add management talent to both corporate officials and Board Members that will further enhance the credibility to the IPO offering to attract investors and the investment community. Our principals are entrepreneurs and have gone public in the hi-tech area (Microwave Power Devices Inc., (NASDAQ: MPDI) is still the leader in the high power microwave, wireless & defense electronic amplifier subsystems market and a leading supplier to companies such as Lucent Technologies). 8. Analysis of Hi-Tech & Health Care Prospectus: 8A. Hi-Tech/IPO Name: Microwave Power Devices, Inc. 6/95 Symbol: MPDI Industry: Wireless/Defense Product: High Power Solid State Amplifiers # IPO Shares Offered: 4,200,000 42% Sold Total Shares: 10,000,000 58% Retained (Control by Management) Price per Share: $12 Total: $50.4 Million (12x4.2) Net to Company: 26.7 Million Selling Shareholders: Company 2,500,000 / Selling Shareholder 1,700,000 Net to Selling Shareholder: $20.4 Million Cost of Deal: 50.4-(26.7 + 20.4) = $3.3 Million or 6.5% Revenues Year Proceeding IPO: $25.1 Million Gross Profit: $7.7 Million Pre Tax: $1.27 Million Backlog Wireless: $15.6 Million Military: $11.6 Million Total Backing: $27.2 Million Underwriters: Robertson, Stephens & JP Morgan RSA: Placed CFO, 11/91; Promoted EVP & COO 3/2/97 MPDI: Aquired by Ericson Dec. 2000 for $8.70/share cash $100M 8B. Health Care Name: National Medical Health Card Systems, Inc. 8/99 Symbol: NMHC Industry: Health Care Product: Prescription Benefit Management # IPO Shares Offered: 2,500,000 TotalShares: 7,312,496 Management will control 54% Price per Share: $9 Total: $22.5 Million (9x2.5) Net to Company: 15.38 Million Selling Shareholders: Company 2,000,000 / Selling Shareholder 500,000 Net to Selling Shareholder: $5 Million Cost of Deal: 22.5-(15.38 + 5) = $2.12 Million or 9.4% Revenues Year Proceeding IPO: $99.9 Million Gross Profit: $6.42 Million Pre Tax: $1.38 Million Underwriters: Ryan, Beck & Co., Penn Meachant Group RSA: Placed Consultant, 7/95; Promoted President & COO 12/7/98
		[Consumer/Professional] [Retail] [Financial Services] [Healthcare] [Hi-Tech] [Internet/e-Business] [Gaming/Hospitality] [Home]