Initiating and Pursuing an Investment Bank
By Socrates Jimenez of
Sutro & Co., Inc.
Los Angeles
Initiating and Pursuing an Investment Bank
- Business Plan
- Business/Industry Description
- Competitive Advantages/Barriers To Entry
- Historical/Projected Financial Results
- Use Of Proceeds
- Established Relationships
Selecting An Investment Bank
- Research Analyst Coverage
- Category Of Investment Bank
- Bulge Bracket
- Regional
- Boutique
- Transaction Experience
- Distribution Capability
- Focus On Your Transaction
- After Market Support
- Long-Term Relationship
Investment Banking Services
- Develop Optimal Strategy For Timing And Efficient Underwriting
- Maximize Offering Price And After Market Performance
- Company And Industry Due Diligence
- Evaluate Strengths, Weaknesses, Opportunities And Threats—Position The Company
- Work With Management, Attorneys And Accountants To Prepare Public Filings
- Work With Company To Prepare "Roadshow"
- Balance Strong Retail And Institutional Demand
- Provide After Market Liquidity And Price Support
- Other Services (I.E. Facilitating Interim Financing)
Investment Bank Firms
- Bulge Bracket
- Merrill Lynch/Goldman Sachs
- Regionals
- Sutro
- Robertson, Stephens
Investment Bankers, Attorneys And Accountants
- Team Effort To Complete Transaction
- Due Diligence
- Legal
- Operational
- Financial
- Registration Statement Drafting
- Sec Filing Documents
- Closing
The IPO Candidate
- Industry Covered By Research Analyst
- History Of Increasing Revenues And Profitability
- Research Analyst Enthusiasm For Transaction
- Realistic Projections And Assumptions
- Experienced And Knowledgeable Management Team
- Favorable Market Conditions
Financial Thresholds For An IPO
- Varies By Investment Banks
- Niche Market
- Industry Focus
- Sutra Guidelines
- Revenues Greater Than $15m
- After-Tax Net Income Greater Than $1m
- Financial Need Greater Than $15m
Marketing Thresholds for an IPO
- Marketing Infrastructure To Support Products, Technology Or Services
- Experienced Marketing Personnel
- Industry Expertise
- Integrated Marketing And Sales Force
Valuation And Pricing
- Comparable Company Analysis
- Price/Earnings Multiples
- Comparable Company Transactions
- IPO Valuations Discount
- Positioning Of The Company
- Marketing To Potential Investors (Roadshow)
- Market Conditions
Syndicate Formation
- Syndicate Manager
- Assessment Of Likely Participants
- Research Coverage Potential
- Prior Relationships On Other Transactions
- Shares Distributed Among Bulge Bracket And Regional Firms And Others
Marketing The Company In An IPO
- Domestic/International Roadshow Presentation
- Potential Institutional Investor Presentations
- Group Breakfasts/Lunches
- One-On-Ones
- Managing Underwriter Internal Presentations
- Institutional Sales Force
- Retail Investment Executives
Post-IPO
- Investment Bank
- Supports Stock After Pricing
- Makes Market In The Stock
- Research Initiates Coverage
- Corporate Finance Continues To Work With Management
- Company
- Investors Relations Responsibilities
- Experienced Personnel To Interface With Public And Wall Street
- Meet Earnings Expectations Set During Roadshow
- Possible Follow-On Offering When Additional Financing Required