Five Keys to Saving Time and Money in Your IPO
By Bruce Alan Mann, Senior Partner, Morrison & Foerster LLP

Some IPOs are completed efficiently and economically; some occupy months of management time and are expensive; some take so long to complete that the IPO window closes and the expense is never recouped. During the past 40 years, I've seen all variations and have reached some conclusions on what you can do to increase your IPO's likelihood of success in a cost effective manner.

1. Every team needs a captain that plays the whole game.

An IPO requires someone to take charge of the process, with authority to set agendas, control meetings and see that everyone carries out their responsibilities. Ideally this is the CEO, but in most cases the CEO can only take charge of the organizational meeting and doesn't have time to spearhead the entire process. A good CFO or an experienced lawyer should be made the point person for the entire process.

2. Don't hold your organizational meeting until people have seen a good draft prospectus.

Many organizational meetings involve people flying in for a quick review of the proposed deal terms and timetable already established by the company and the managing underwriter, followed by a presentation by the issuer to an audience lacking enough familiarity with the business to ask intelligent questions. I strongly favor making the organizational meeting a substantive due diligence meeting by the issuer distributing a draft prospectus reflecting its view of itself before the organizational meeting. Taking a little more time at the beginning will save time in the end.

3. Establish a realistic timetable that involves no more drafting sessions than really required.

Too often drafting sessions are held in rapid succession and at times when the working group has not had time to produce meaningful comments. Extra sessions may be held merely to keep the process moving forward while waiting for the financial statements to be completed. Lawyers and accountants bill by the hour and excess meetings are an expensive waste of time. I firmly believe the quality of the prospectus doesn't depend on the number of drafting sessions, and that intelligent planning with a limited number of meetings based on a realistic schedule produces the best result.

4. if you have a problem, don't hide it.

Issuers sometimes think that they should delay discussing difficult issues on the theory that underwriters will be less likely to back away or lower the range once they have become more involved in the process. Wrong. Underwriters are more likely to walk away from an offering if they believe management has hidden or minimized a problem and can't be trusted.

5. Cooperate and Coordinate with the SEC.

Remember that the SEC controls your time table. Keep your SEC examiner informed about your planned time schedule so that he or she can be aware of your expectations and let you know if they are unrealistic. Additionally, unless a SEC comment is clearly wrong, don't let pride of authorship stand in the way of completing the offering. Give the SEC staff what it asks for, or explain to them why their comment is wrong. And if they still don't understand, don't keep fighting. If your position is not clear to the SEC, it won't be clear to many investors either.

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