Preparing for IPO - the process & the role of advisors

1. Preparing for the IPO:
pre and post IPO considerations:
the role of advisors
Capital Raising Seminar
26 June 2008
Andrei Burz Pinzaru
Senior Manager
26 June 2008
Reff & Associates is the correspondent law firm of Deloitte Romania

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Reff & Associates
Correspondent law firm of Deloitte Romania

3. Preparing for the IPO
Some key ingredients for a succesfull IPO
 IPO decision has been taken after due consideration (outside counsel recommended)
 Preparation for the IPO (pre – IPO)
 Proper selection of advisors
 Proper planing and implementation
 Right timing from a market perspective
Things to know before taking the decision
 Complex, multidisciplinary process
 Assessment of the stakeholders needs
 Benchmark of IPO versus alternatives
 Assessment of Company’s IPO readiness
Action to be taken after taking the decision
 Appointment of pre-IPO / IPO advisors
 Definition of roles and allocation of tasks
 Preparing and agreeing on an action plan
 Implementing the plan
 Budget management time
Reff & Associates Preparing for the IPO:
Correspondent law firm of Deloitte Romania pre and post IPO considerations

4. IPO Complex network of advisers
Investment
Company
banker
legal
Legal
counsel
counsel
Securities
Stock Exchange
Commission
Investment
Broker Company
banker
Securities registrar Auditor
Management
/ IT Financial
consulting advisor
advisor
Tax advisor
Reff & Associates
Correspondent law firm of Deloitte Romania

5. How many legal outside counsels?
According to a famouse quote from one of William Shakespeare’s
plays…too many: “The first thing we do, let's kill all the lawyers”
 Not the case in an IPO!
 Company’s outside counsel
 Investment banker / broker’s lawyers
Reff & Associates Preparing for the IPO:
Correspondent law firm of Deloitte Romania pre and post IPO considerations

6. Company’s legal outside counsel (1)
What should you ask for?
Change of approach: going from private to public
Pre- IPO due diligence.
 review of corporate structure (including subsidiaries)
 verify title to their respective assets,
examine material contracts and employment agreements, current/potential litigation
 identify potential legal risks which may impact the IPO
 propose appropriate remedial actions;
 assist the company in the implementation of remedial actions or identifying risks
mitigants (e.g., for real estate properties – title insurance policies);
Preparing for the IPO:
Reff & Associates pre and post IPO considerations
Correspondent law firm of Deloitte Romania

7. Company’s legal outside counsel (2)
What should you ask for?
 Pre-IPO restructuring.
Spinning of non-core activities,
Merging of several entities,
Restructuring the group of companies so as to create a holding company, etc;
Liaise with Tax advisors
Value for money: due diligence and restructuring can be usefull to the
company even if the IPO is not pursued.
 Review and update the articles of association
 Assist the company in the implementation of the corporate governance principles
Preparing for the IPO:
Reff & Associates pre and post IPO considerations
Correspondent law firm of Deloitte Romania

8. Company’s legal outside counsel (3)
What should you ask for?
 Advice on share option schemes
 Advice to the company’s directors on:
 responsibilities both under the prospectus
 corporate governance
 Negotiation / advice on the terms of the agreements with:
 the company and the investment banker / broker
 the Central Depository
 Advice on the drafting of the preliminary prospectus / admission document, with a
general role in assisting the directors and other advisers, in ensuring that the
document is accurate and complete
 Assist in drafting the shareholders/board resolutions
 Advice generally on the legal aspects of the flotation process and the continuing
obligations of the company and the directors following the IPO / stock exchange
listing
Preparing for the IPO:
Reff & Associates pre and post IPO considerations
Correspondent law firm of Deloitte Romania

9. Investment banker/broker’s legal outside counsel
 Review the preliminary prospectus / prospectus / admission document and
supporting documentation, and any other investment communications proposed
to be issued
 Draft and negotiate on behalf of the investment banker / broker the
placing / broker / introduction agreement
 Liaise with Securities Commission and the Stock Exchange
Preparing for the IPO:
Reff & Associates pre and post IPO considerations
Correspondent law firm of Deloitte Romania

10. Post IPO securities compliance
 Implementation of an appropriate reporting system;
 Some of the things to be known:
 Insider trading information
 List of insiders
 Reporting price sensitive information (annual, semi-annual, on-
going reports)
Preparing for the IPO:
Reff & Associates pre and post IPO considerations
Correspondent law firm of Deloitte Romania

11. Map to Market: Assessing the Funding Strategy and Possible IPO Deployment
Transaction Services / Corporate Finance
Valuation Advice Review of Pre-IPO Pre-IPO financial due Working Third Party Mergers &
Strategic Options Fundraising diligence Capital Report Valuations Acquisitions
Tax Support
Tax Due Diligence Personal Tax Corporate Tax Structuring the Analysis of proposed
Structuring Structuring Disposal IPO structure
of Shares
Accounts & Audit
Transformation 3 years of audited Accountants
financial statements Report
Corporate Governance
Risk Management Internal Controls Reliability and Committee Structure Good Director Internal
Framework Integrity of Data Development Corporate Education Audit
Citizenship Function
Financial Reporting Procedures
Budgeting & Management IT Support Systems
Forecasting Reporting Implementation
Human Capital
Hiring Key Management Developing Human Rewards & Corporate Structure
Capital Motivation Review
Legal Support
Legal Due Diligence Oversees Changes Assist in Oversee Preparation Assistance in respect Assist the
to Articles Corporate and Verification of of contracts with third parties company
of Association and Restructuring
Directors Contracts and the Prospectus involved in the IPO on securities
Capital Raising compliance

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www.deloitte.com/ro/legal

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