November 10, 2001 Underwriting in the Current Market Environment Bill Rodoni, Vice President Credit Suisse First Boston
Summary Overview 1.
2.
3.
4.
Choosing ing an Inv Invest estment ent Ban Bank k –
Key Criteria
–
The Market Leader
Curren rrentt Marke arkett Enviro ironment ent –
Market Indices
–
Market Appetite
–
IPO Pipeline / IPO Criteria
The IPO Process –
Prepping for a Successful IPO
–
A Typical Offering
–
A Look at Valuation
Wrap-Up
Summary Overview 1.
2.
3.
4.
Choosing ing an Inv Invest estment ent Ban Bank k –
Key Criteria
–
The Market Leader
Curren rrentt Marke arkett Enviro ironment ent –
Market Indices
–
Market Appetite
–
IPO Pipeline / IPO Criteria
The IPO Process –
Prepping for a Successful IPO
–
A Typical Offering
–
A Look at Valuation
Wrap-Up
1. Choosing an Investment Bank
Key Criteria for Selecting Your Underwriter 1. Size Matters!
Choosing a relationship with a large, established bank is the beginning of a longterm relationship Larger balance sheet ensures continuity and diversity of product offerings
2. Equity Research
Serves as the primary link between buyside investors and the Company Third party validation is key
3. Variety of Products
Breadth and depth of products ensures the most complete corporate finance advice
4. Retail Distribution
Improves transaction success rate Better diversifies shareholder base
5. Strong Track Record
Previous success a leading indicator for future success
The Global Powerhouses
83,000+ Employees
62,679+ Employees
23,050+ Employees
937 Offices in 30+ Countries
603 Offices in 27 Countries
42 Offices in 20+ Countries
$871 Billion in Assets Under Management or Supervision
$548 Billion in Assets Under Management or Supervision
$581 Billion in Assets Under Management or Supervision
$25.2 Billion in Equity Capital $671.0 Billion in Assets
$18.7 Billion in Equity Capital $404.1 Billion in Assets
$12.7 Billion in Equity Capital $275.0 Billion in Assets
$24.5 Billion in Revenues (LTM)
$42.3 Billion in Revenues (LTM)
$32.2 Billion in Revenues (LTM)
CSFB: A Leader in All Major Investment Banking Products
(Ranked by Number of Transactions / Dollar Volume)
Total Equity(1)
#1 / #4
#5/ #3
#3 / #1
IPOs(1)
#1 / #3
#3 / #1
#2 / #2
Research(2)
#1
#3
#5
Announced M&A
#1 / #3
#5 / #2
#3 / #1
Convertibles
#3 / #3
#4 / #5
#5 / #2
High Yield Debt
#1 / #1
#3 / #3
#4 / #4
Investment Grade Debt(3)
#2 / #3
#4 / #6
#7 / #7
Source: Securities Data Corporation for the period of 1/1/00 through 9/30/01. (1) All North American issues.
CSFB: Unparalleled Institutional Sales Capabilities CSFB has the largest and most effective institutional salesforce on the Street, delivering the most in-depth and intensive coverage to the leading investors…
Largest
Institutional Salespeople(1)
675
400
560
Highest Ranked
2000 Reuters Survey
#1
#3
#2
2000 Institutional Investor
#1
#3
#6
Most Experienced
2000 - 2001 Equity Offerings*
238
154
197
2000 - 2001 Technology Offerings**
111
81
80
Technology Focused
Global Tech Salespeople
26
13
17
2000 II Technology Sales
#1
#2
#4
* **
Domestic equity new issues for the period of 1/1/00 through 9/30/01 (includes IPOs and Follow-On offerings). Global equity new issues for the period of 01/01/00 through 9/30/01 (includes IPOs and Follow-On offerings).
CSFB: The Most Comprehensive Retail Distribution Network … and the breadth of CSFB’s retail coverage is unmatched.
U.S. High Net Worth
Number of Brokers
500
250
500
Intl. High Net Worth(1)
Number of Brokers
750+
100
100
Pershing
Dean Witter
17,000
11,000
CSFBdirect
MS Online
#1
#7
Traditional Retail
Retail Channel
Online Distribution
Online Channel
Number of Brokers
Broker Ranking *
* Barrons, March 2001 (1) Includes high net brokers employed by the Credit Suisse Group.
Goldman Sachs 600
GS Online NA
Trading Support
Rank
#1
#5
#4
11.0%
5.4%
5.5%
#1
#3
#5
8.6%
6.4%
5.2%
# of OTC Stock Traded
745
550
450
# of Market Makers
35
21
18
Avg # of Stocks/ Market Maker
21
26
25
NYSE U.S. Listed Stocks
%
OTC U.S. Stocks*
Rank %
Source: AutEX / Block DATA
Reputation for High Quality Transactions Reuters Survey of Fund Managers* Overall Rankings
2000
23%
1999
11%
Goldman Sachs
17
14
Morgan Stanley Dean Witter
16
14
Merrill Lynch
9
12
Salomon Smith Barney
6
12
Category
1st Place
Quality of new equity issues Due diligence on new issues Pricing of new equity issues Equitable allocation of new issue product Quality of research product and service in the aftermarket Aftermarket performance of equity issues * In a survey dated July 19, 2000, Reuters surveyed 75 of the largest institutional managers of active US equity funds. They estimate that their sample represents 88% of the active institutional funds invested in mid- and small-cap equities. Responses have been weighted by fund size.
The Clear Leader in Technology Investment Banking
2000 - 2001 Total Technology Financing and M&A
2000 - 2001 Total Technology Financing and M&A
(Number of Deals)
(Dollars in Billions)
400
389 $400.00
$380.9 $350.5
350 $350.00 300
$300.00
233
250
232 188
200
157 150
$189.7
$200.00
$181.3
143
$133.1 $103.4
$150.00
99
100
98
50 0
$237.9
$250.00
$81.0
$100.00 $50.00
CSFB
GS
MS
JPM CIT /SSB M L
Notes: Transactions announced 1/1/00 through 9/30/01.
DBAB
L EH
$0.00
CSFB
MS
GS CIT/SSB JPM
ML
LEH
BofA
Bankers Who Led Industry-Defining, “First -of-a-Kind” IPOs 1990
1993
1994
1995
1997
1998
1999
2000
2001+
2. Current Market Environment
Market Conditions ------- THEN
Market Conditions ------- NOW
Weak Equity Markets Further Challenged by the Impact of the Tragic Events The terrorist attacks of September 11th added a new dynamic to markets which were already off significantly YTD
Equity Market Performance 130%
Sept 11 Terrorist Attacks
120%
Performance from: 1/1/01 - 7/31/01 8/1/01 - 9/10/01 9/11/01 - Current YTD
110% 100%
YTD
90% 80% 70% 60% 50%
Dow
Fed cuts rates: Jan 3: 50bps Jan 31: 50bps Mar 20: 50bps April 18: 50bps May 15: 50bps June 27: 25bps Aug 21: 25bps Sept 17: 50bps Oct 2: 50bps
40% 12/29
1/29
2/28
S&P 500
-17.7%
Nasdaq
-29.3%
-37.4%
4/29
5/29
6/29
7/29
8/29
9/29
10/29
Impact on Volatility and Liquidity
NASDAQ DJIA S&P
% of Days with Greater Than 3% Movements 1999 2000 2001 YTD Since 9/17 7.8% 29.7% 25.4% 28.6% 0.0% 2.7% 4.1% 8.6% 0.4% 4.3% 3.6% 5.7%
NASDAQ NYSE
Average Daily Volume 2000 2001 YTD Since 9/17 1,667 1,791 1,904 1,042 1,232 1,712
1999 1,049 809
Dow S&P 500 -2.4% -8.3% -8.7% -9.8% -2.9% -0.5% -13.6% -17.7%
-13.6%
CSFB Tech
3/29
Nasdaq -17.9% -16.4% 3.0% -29.3%
One month later, markets have returned to pre-September 11 levels Market continues to be characterized by: Increased volatility: extreme intra-day shifts as market is trading on news and rumors Recent volumes on both Nasdaq and NYSE greater than year-to-date averages Expectations of negative preannouncements
Large redemptions remain a key concern Outflows of $29.5bn for month of September; consequently, cash reserves at mutual funds are high
Weakened Earnings Outlook Clouded by Potential Recession % Change of FY1 EPS Estimates of Tech Companies in S&P 500 10.0%
6.6%
Mean First Call EPS Estimates
6.1% 1.6%
0.0% Q 1 2 00 0 Q 2 20 00 Q3 20 00 Q 4 20 00 Q 1 2 00 1 Q 2 2 00 1 Q 3 2 00 1 -10.0%
-8.5%
-20.0% -30.0% -36.6%
-40.0%
-39.8%
-50.0%
2001 estimates lowered again as likely IT and capital spending freeze expected to remain through remainder of year. 2002 estimates revised to create more realistic expectations for investors
-47.4%
Expected pullback in spending as consumer and business confidence severely shaken – GDP growth estimates lowered for Q3 and Q4 2001
% of Companies with Lowered Estimates -60.0%
Concerns over a weakened U.S. and global economy, falling corporate profits and an unstable political environment have intensified
21%
28%
30%
60%
79%
83%
85%
Real GDP (Indexed to Q1 1990) 100.4
Periods represent quarters
100.2 100.0 1
2
3
4
5
99.8 99.6 99.4 99.2 99.0 98.8
Q1'01 - Q3'01 Q1'90 - Q4'91
6
7
8
On November 7th, the Fed cut interest rates by half a point to their lowest level since 1961 and, citing a deteriorating economy, suggested more cuts could be in store Tax cuts will help add liquidity, but will consumers spend or save?
History Indicates Markets Are Likely To Pick Up Over the Long-Term 1990 - 1991 Equity Market Performance 40% Aug 2, 1990: Iraq invades Kuwait
30%
Jan 16 - Feb 28, 1991: Persian Gulf War
20%
10%
0%
-10%
Nasdaq: 28.9% S&P 500: 18.0% Dow: 15.1%
-20%
-30%
-40% 1/1/90
4/1/90
7/1/90
10/1/90
1/1/91
4/1/91
7/1/91
10/1/91
NASDAQ’s Average Reaction to Major Surprise Attacks Date
Event
8/2/1990 2/26/1993
Iraq invades Kuwait - Operation Desert Storm World Trade Center bombed (1)
4/19/1995 9/11/2001
Oklahoma City Federal Building bombed Terrorist Attacks on America 1 Day Later
1 Week 2 Weeks Later Later
2 Years 3 Years Later Later
(3.7%) 1.6%
(6.2%) 3.3%
17.9% 16.8%
35.4% 17.9%
64.3% 65.9%
4/19/1995 9/11/2001
0.3% (6.8%)
2.5% 4.1% (16.1%) (11.6%)
39.2% ----
49.7% ----
128.6% ----
24.6%
34.4%
86.3%
(3.9%)
(2.6%)
Markets will rebound from current lows:
1 Year Later
(2.7%) (0.2%)
(2.3%)
History indicates that stock prices have usually risen on average by 25% one year and over 34% two years following a surprise attack
8/2/1990 2/26/1993
Average
CSFB‟s equity strategist, Tom Galvin, believes the terrorists attacks may accelerate and pull forward a recession, ultimately resulting in a stronger Vshaped recovery as infrastructure is rebuilt – similar pattern seen during the „90 - „91 recession, Iraqi invasion and Gulf War
Cash reserves at mutual funds high; buyside looking for good investment ideas US economy expected to recover by Q2 2002 as household/consumer confidence restored, lower interest rates expected and expansionary fiscal policy underway
New Issue Market is Returning to Life New issue activity has rebounded since September 11
Weekly New Issue Volumes $8,000
% of Total 16% IPO CVT 40% COM 43%
$7,000 $6,000
$2,119 $40
$5,000
$1,823
$4,000
$2,626
$60
$3,000
$114
$3,193
$686
$1,754 $2,000
$2,000 $15
$1,000
$1,645 $246
$972
9/17
9/24
$1,12 9
$2,649
$2,884
10/22
10/29
$1,672
$0 9/11
10/1
10/8
10/15
Backlog is Building Across All Sectors (1) Healthcare Telecommunications Insurance Technology Financial Institutions Real Estate Professional Services Energy Retail Consumer Products
IPO Amt # of Iss $2,786 18 $0 0 $1,850 1 $702 10 $244 7 $564 2 $740 5 $671 7 $590 3 $0 0
Follow-ons Amt # of Iss $957 8 $1,177 2 $25 1 $1,094 6 $858 9 $228 5 $0 0 $0 0 $0 0 $0 0
Total (Top 10) Total
$8,147 $8,349
$4,339 $5,091
(1)
53 55
Deals on file for less than 180 days
31 40
Total Amt # of Iss $3,743 26 $1,177 2 $1,875 2 $1,796 16 $1,102 16 $792 7 $740 5 $671 7 $590 3 $0 0 $12,486 $15,301
84 100
Convertibles: • 25 deals for $9.8bn • Given low Treasury yields and high equity volatility, the convertible market has been extremely active Follow-Ons: • 51 deals for $10.9bn • Average discount to last trade is -2.6% • Average % change from offer to current is 7.0% IPOs: • 8 deals for $4.0bn • Average 1st day appreciation is 14.2%
Technology new issuance has been limited to converts and follow-ons thus far
Convertibles: EDS ($780mm), FNSR ($100mm), SYMC ($525mm), ASML ($500mm), TER ($350mm), LSI ($450mm), MOT ($1,050mm), AV ($400mm), FCS ($200MM) Follow-Ons: ISIL ($441mm), INKT ($53mm), ACS ($648mm), MXO ($103mm)
Institutional Investors Are Receptive to New Issues Portfolio Managers will buy stories with all pieces in place
Large and growing market opportunity Differentiated technology and/or definable business model Diverse, high quality customer base Management team with impeccable execution track record and vision
No “hair”
Companies that are “real” will have a broad institutional audience
Significant revenue base (i.e. ~ $10 mm) during quarter going public High revenue visibility - strong, diverse backlog needed Profitability reached shortly after offering (i.e. 2-3 quarters)
Valuation and structure will be important selling points
Shift from revenue to earnings multiples - „02 P/E is very positive Price on cover reflects expected pricing Attractive valuation versus comparable group Other investor issues include: early lockup releases, option dilution and funding to breakeven
IPO Criteria: Then vs. Now
Then
Now
Q4 2000
August 2001
4 to 5 quarters to profitability
Revenue multiple
$4-6 million
1-2 customers; possibly equity investors
Buzz surrounding hot sectors provided instant investor attention
Vague visibility towards steady state model
Growth through R&D spending was rewarded in exchange for near-term profitability
Profitability
Investors comfortable with soft targets and vague references to long-term financial performance goals
1 to 2 quarters to profitability
Strong quarter-over-quarter growth and strong revenue diversification are required
Valuation
Revenue and P/E multiple
Revenue in Q prior to IPO
$10-15 million
Customer Base
Quality, diversified customer base Well-financed customers
Unique market opportunity necessary
Infrastructure in place to grow to profitability
Solid management team
Near-term visibility towards steady state model
Type of Entrant
Long-term Financial Model
Investors expect specifics regarding achievement of steady state
Tech IPO Snapshot TODAY:
LOOKING BACK:
In 2001, only 15 tech IPOs have been completed
Of the IPOs Completed from May 15, 2000 (i.e. the beginning of the recent correction):
Aftermarket trading performance of these stocks has exceeded the tech IPO classes of 1999 and 2000 --- 2001 IPOs are down 5.1% from offer to current Amount
Tech IPOs
($MM)
# of
Midpoint
Offerings Market Value
$8,736 $29,589 $32,051
2001 2000 1999
IPO
15 223 327
$44,325 $227,328 $203,761
Offer to
to Offer
Day 1
Current
-7.9% 20.1% 25.5%
20.5% 77.3% 92.8%
-5.1% -61.6% -32.8%
Average IPO performance: (54.6%)
IPOs trading below issue price: 83.1%
Average loss of IPOs below issue: (73.6%)
IPOs below 1st day close: 90.0%
Technology Research Universe Performance by Sector % Change in Price CSFB Technology Research Sectors
Date
8/9/2001 7/30/2001 7/26/2001 7/18/2001 6/27/2001 6/20/2001 6/7/2001 5/17/2001 5/16/2001 5/1/2001 3/27/2001 3/20/2001 3/8/2001 2/15/2001 2/7/2001 Average
Issuer
Mykrolis Corp HPL Technologies PDF Solutions, Inc. Accenture Ltd. Monolithic System Technology Multilink Technology Corp. Alliance Data Systems Corp Instinet Group LLC Tellium Inc. Simplex Solutions Inc. Agere Systems Inc. Verisity Ltd. Loudcloud, Inc. Riverstone Networks Inc. KPMG Consulting, Inc
Amount Offer from ($MM) Orig. Mdpt
$ 105.0 $ 66.0 $ 54.0 $ 1,667.5 $ 50.0 $ 72.0 $ 156.0 $ 464.0 $ 135.0 $ 48.0 $ 3,600.0 $ 23.3 $ 150.0 $ 120.0 $ 2,024.7
(6.3%) 0.0% 0.0% 3.6% 0.0% 0.0% (7.7%) 16.0% 7.1% 9.1% (53.8%) (22.2%) (45.5%) 0.0% (19.4%) (7.9%)
% Change in Price Offer to Day 1 Current
8.3% 21.4% 26.3% 4.6% 12.2% 24.3% 16.7% 21.7% 39.5% 76.7% 0.3% 14.3% 2.6% 8.9% 30.5% 20.5%
(32.3%) 13.7% 36.8% 21.5% 19.7% (53.7%) 32.7% (32.9%) (47.7%) 16.8% (15.0%) 42.9% (59.2%) 13.8% (33.6%) (5.1%)
1st Day to Current
(37.5%) (6.3%) 8.3% 16.2% 6.7% (62.7%) 13.7% (44.9%) (62.5%) (33.9%) (15.3%) 25.0% (60.2%) 4.5% (49.1%) (19.9%)
# of Co's
YTD 2 00 1
2 00 0
Since 9/11
52-Week High
Since 9/11 Mkt. Adj.
Storage and Data Networking
14
-48.5%
-22.5%
29.7%
-76.1%
25.4%
Telecom Equipment - Wireline
32
-68.7%
13.0%
21.2%
-84.2%
16.9%
Data Services
9
-41.6%
-45.8%
20.7%
-80.1%
16.4%
Internet and eBusiness Infrastructure
18
-40.9%
-19.3%
16.9%
-70.1%
12.6%
Telecom Equipment - Wireless
31
-56.7%
-24.7%
14.6%
-75.1%
10.3%
eCommerce
31
-31.3%
-14.8%
14.4%
-62.1%
10.0%
Electronic Components and Distributors
19
-8.6%
-11.0%
8.5%
-46.4%
4.2%
Electronic Infrastructure / Tech. Software
12
-8.0%
-13.9%
7.1%
-42.4%
2.8%
Business Software Applications
21
-69.5%
-12.4%
6.1%
-82.1%
1.8%
Semiconductors
33
-5.1%
-1.0%
5.8%
-50.2%
1.5%
Internet Infrastructure Software
22
-58.8%
-45.7%
5.1%
-80.7%
0.7%
4
-76.9%
-11.8%
1.2%
-87.8%
-3.1%
PC & Enterprise Hardware
10
-14.2%
-43.7%
0.9%
-51.3%
-3.5%
Contract Manufacturing
13
-43.7%
-1.4%
-0.4%
-70.2%
-4.8%
Comm. Software and Enhanced Services
9
-44.9%
2.8%
-1.0%
-68.5%
-5.4%
Optical Components
IT Consulting & Computer Services
30
-19.5%
-59.1%
-1.1%
-53.3%
-5.5%
Software
14
-53.4%
25.5%
-1.5%
-76.0%
-5.9%
Semic onductor Capital Equipm ent
18
0.0%
-28.2%
-1.8%
-42.6%
-6.1%
Internet / New Media & eCommerce
30
8.4%
-71.7%
-5.0%
-61.2%
-9.3%
Test & Measurement
8
-38.9%
-29.0%
-5.2%
-62.9%
-9.6%
Latin America Internet
4
-38.7%
-85.2%
-10.4%
-82.9%
-14.7%
Communications ICs
16
-47.3%
-0.4%
-11.2%
-73.2%
-15.5%
Imaging
7
-21.6%
-33.3%
-18.4%
-50.1%
-22.7%
405
-34.2%
-22.1%
6.3%
-65.6%
1.9%
All Technol ogy Sectors
Technology IPO Activity And Performance Have Declined Technology IPO Data - Monthly
Technology IPO Volume
Original Midpoint to Offer Price 70.0%
$10,000 11
34
40
21
12
18
29
13
30
6
8
1
0
2
3
0
3
3
3
1
0
0
52.2% $8,297
51.9%
50.0%
45.1%
$8,000
30.0% $6,000
18.3% 8.9% 10.3%
10.7%
10.0% 1.7%
2.9%
$4,322
1.2%
$3,773 $4,000
$3,612
$3,782
-2.6% -6.3%
-6.4%
-6.9% -7.2%
-10.0%
-9.7%
$2,534 $2,145
$2,026
$1,788
$2,000 $1,050
$952 $647
$605 $191 $0
0 0 N A J
B E F
R A M
R P A
Y A M
-19.2% -30.0%
$1,211
$1,005
N U J
L U J
G U A
P E S
T C O
V O N
C E D
$278
$0 1 0 N A J
$105
$0 B E F
R A M
R P A
Y A M
N U J
L U J
G U A
$0
$0
P E S
T C O
-40.5% -50.0% 0 0 N A J
R A M
B E F
R P A
Y A M
N U J
L U J
G U A
P E S
T C O
V O N
C E D
1 0 N A J
B E F
R A M
R P A
Y A M
N U J
L U J
G U A
P E S
T C O
Offer Price to Current Performance
1st Day Trading Performance 30.0%
160.0%
24.0% 20.0%
144.2% 140.2% 140.0%
10.0% 0.0% -0.4%
120.0%
-10.0% -9.9%
105.1%
-20.0%
100.0%
-14.9%
-10.4% -21.3%
-30.0% 80.0%
-32.3%
-40.0% 67.4%
-45.5%
-50.0%
61.5% 60.0% 47.1%
46.0%
50.0%
34.6%
33.5%
40.0%
24.1% 25.4% 17.7% 17.4%
-100.0% 0 0 N A J
B E F
R A M
R P A
Y A M
N U J
L U J
G U A
P E S
T C O
V O N
C E D
-76.0%
1 0 N A J
B E F
R A M
-77.3%
-90.0% 8.3%
5.7% 0.0%
-64.1%
-69.7%
-80.0% 19.7%
-63.1%
-65.4%
-70.0%
20.0%
-52.8%
-53.2%-53.1% -54.9%
-60.0%
46.9%
R P A
Y A M
N U J
L U J
G U A
P E S
T C O
0 0 N A J
B E F
R A M
R P A
Y A M
N U J
L U J
G U A
P E S
T C O
V O N
C E D
1 0 N A J
B E F
R A M
R P A
Y A M
N U J
L U J
G U A
P E S
T C O
3. The IPO Process
Valuation Overview -- It’s a Buyer’s Market
Concerns over a slowing economy, earnings warnings, low visibility and recent political instability continue to test the markets in 2001 with the Nasdaq currently down over 29%(1) from the beginning of the year
IT purchases and budgets have been severely disrupted – September quarter software sales, already weak from the poor economic environment, have been particularly hard-hit after the terrorist attacks – Two separate components: short-term disruption to purchasing decisions and longerterm macroeconomic risk that extends at least into next year – CY 2002 visibility is low at the moment, as is sales linearity within quarters
In 2001, only 15 tech IPOs have been completed, of which 13 are below issue price
IPO Process --- THEN
IPO Process --- NOW
Valuation Methodology
Review and refine Company projections to create “street case”
Typical “haircuts” between 15-30% based on:
Analysis and diligence of Company‟s financials
Company‟s track record
Macro spending conditions
Apply three valuation frameworks to triangulate a fully distributed trading value
Comparable Company Analysis, Recent IPO Analysis and Intrinsic Value Analysis
Assumptions
An offering that takes place in early ‟02 will be valued on ‟03 multiples
at that time
Filing/Pricing multiple discounted 20-25% from fully distributed trading multiples
Valuation Frameworks
Comparable Company Analysis
Identify peer group: Infrastructure Management Software Vendors Calculate trading multiples Apply relevant multiples to Company’s results to determine potential fullydistributed value
Intrinsic Value Analysis
Recent IPO Analysis
Identify pricing statistics for recent IPOs of peer group companies
Calculate filing, pricing and trading multiples
Apply relevant multiples to Company’s results to determine marketing approach and potential filing, pricing, and trading values
Project out future cash flows
Determine discount rate and intrinsic value multiples
Apply relevant multiples to Company’s results to determine potential value
Typical IPO Structure Lead Manager / Bookrunner:
Credit Suisse First Boston
Co-Managers:
2 - TBD (primarily research-driven)
Economics:
50% / 25% / 25% (2 Co-Managers)
Deal Size:
$50-60MM; 15% Greenshoe
Shares Offered:
100% primary recommended
Domestic / International Split:
80% / 20%
Institutional / Retail Split:
80% / 20%
Directed Shares:
Up to 5%
Lockup:
180 days
Representative IPO Timetable S
4 11 18 25
S
6 13 20 27
NOV EM BER 2001 M T W T F S 1 2 3 5 6 7 8 9 10 12 13 14 15 16 17 19 20 21 22 23 24 26 27 28 29 30
JANUARY 2002 T W T F S 1 2 3 4 5 7 8 9 10 11 12 14 15 16 17 18 19 21 22 23 24 25 26 28 29 30 31
M
S
3 10 17 24
S
DECEM BER 2001 M T W T F
S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
FEBRUARY 2002 M T W T F S 1 2 4 5 6 7 8 9 11 12 13 14 15 16 18 19 20 21 22 23 25 26 27 28
S
3 10 17 24 31
M
MARCH 2002 T W T
F S 1 2 4 5 6 7 8 9 11 12 13 14 15 16 18 19 20 21 22 23 25 26 27 28 29 30
Denotes Holiday
DATE
EVENT
Week of November 26-30, 2001
Weeks of December 3-21, 2001
Organizational meeting Initial due diligence and management presentations Initial drafting session
Continue due diligence Continue drafting sessions Drafting sessions at printer
File S-1 with unaudited Q3 results
Weeks of January 2-25, 2002
Roadshow preparation
Week of January 28 - February 1, 2002
December 21, 2001
st
Week of February 4-8, 2002
Receive 1 set of SEC comments File Amendment No. 1 to S-1 with audited year-end results nd
Receive 2 set of SEC comments File Amendment No. 2 to S-1
Week of February 11-15, 2002
Weeks of February 19 - March 5, 2002
European & US Roadshow
March 5, 2002
Pricing
Management presentation to Underwriters‟ Salesforce
Key Marketing Variables
Technology Specialist Coverage
Gameplan Establish Early Momentum
Design High-Impact Marketing Schedule
Global Penetration
Motivated Management Structure
Generate Strong “Online” Demand
Powerful Institutional Relationships
Typical Marketing Objective
Roadshow Schedule: Focus on Key Accounts
8-9 day Roadshow targeting 40-50 investores for one-on-one meetings
2-3 day European Roadshow targeting 10-15 investors for one-on-one meetings
Generate Key Early Orders to Establish Momentum
Qualify with Aftermarket Feedback
Provide Strong Trading Support
Post-IPO Support
Detailed initiation report; quarterly updates; realtime electronic dissemination of intra-quarter news
Commitment to be leading market maker; willingness to use capital
Institutional investor follow-up road shows to broaden investor base
Post-IPO technology conferences
M&A ideas, analysis and execution
Introduction to strategic partners
Financing alternatives (secondary, convertible, debt, bridge financing)
Employee stock option hedging program
CREDIT SUISSE FIRST BOSTON CORPORATION
Equity Research - Americas
CREDIT SUISSE FIRST BOSTON CORPORATION
CREDIT SUISSE FIRST BOSTON CORPORATION Equity Research - Americas Wendell Laidley (415) 836-7716
[email protected]
Equity Research - Americas Jim Marks (212) 325-6550 jim.marks @csfb.com Life-Altering Technology
Strong Buy
Curt Schilling (212) 555-9000
[email protected]
Strong Buy
Buy
Empowering Change
“COMPANY”
The Role of Research Pre-IPO
IPO Marketing
Significant “front-end” effort to position company‟s story
in prospectus and roadshow
Active involvement on roadshow
Prepare management for key accounts
Sales force “teach-in” to
begin communicating the Company opportunity
Post-IPO
Detailed report issued immediately after 25-day quiet period expires
Timely communication with the market as company events dictate (e.g., high profile customer wins, acquisitions, significant industry events)
Frequent updating to institutional salesforce to ensure institutions
Monthly First Call Notes
Quarterly earnings reports
Direct follow-up with key investors after one-on-one meetings
CREDIT SUISSE FIRST BOSTON CORPORATION
Equity Research - Americas CREDIT SUISSE FIRST BOSTON CORPORATION EquityWendell Research - 836-7716 Americas
[email protected] Laidley (415) Equity Research - Americas
Jim Marks (212) 325-6550 jim.marks @csfb.com Life-Altering Technology
Strong Buy Strong Buy Buy
Randy Johnson (212) 555-9000
[email protected]
“COMPANY”
4. Wrap-Up
Summary of Key Ideas
It is important to choose an investment bank that can meet your needs today and in the future –
Reputation - successful record of previous transactions enhances your credibility
–
Size - helps ensure ease of execution
–
Complete Suite of Product Offerings
–
Aftermarket Support from Equity Research and Trading
Difficult market conditions have drastically reduced that number of IPOs in 2001 – –
Criteria for going public has become more stringent -- back to fundamentals A buyer‟s market
The “right” companies can still access the public equity markets!
