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Tax and Legal Issues in Structuring Mergers and Acquisitions
Mark Cameron White of White & Lee LLP
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Preparing For and Pulling Off a U.S. Initial Public Offering
Mark Tanoury of Cooley Godward LLP
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Finding and Engaging an Investment Banking Firm
Ron Richards of First Security Van Kasper
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Alternative Financings on NASDAQ & New York Stock Exchanges
Jim Coufus, Spear, Leads and Kellogg
Bruce Krogstad, The NASDAQ Stock Exchange
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Financings of the Vancouver Stock Exchange
Robert Zalaudek, Vancouver Stock Exchange
David Raffa, Partner, Catalyst Corporation Finance Lawyers
Michael Evans, Principal, Evans & Evans, Inc.
Neil Macdonald, Corporate Finance, Goepel McDermid Securities
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Stories From the Street - A Company Perspective
Vimal Vaidya, Internet Tools, Inc.
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— Mark White of White & Lee LLP.
Mark discussed structuring, tax and securities issues in the sale of private technology companies. He also covered issues such as (a) how to value the target company, (b) locating potential acquirors, (c) the M & A process, and (d) key issues for management and continuing employees.
— Mark Tanoury of Cooley Godward LLP
Mark addressed the business and legal issues leading up to an initial public offering, including such concerns as (a) determining the fair market value of the Company's stock leading up to the IPO, (b) determining the appropriate amount of outstanding warrants and options convertible into stock, (c) issues relating to the maturity of the Company and appropriate revenue and profitability expectations for an IPO, (d) pre-planning to identify potential problems in the Company's capitalization or corporate documents, (e) when and how to introduce the Company to the investment banking community and listing exchanges, and (f) recent trends and the timing of IPOs in the "internet age" - and how traditional milestones of revenue and profitability growth necessary for taking companies public may be changing. Mark also spoke in general terms about the listing process, including the role of management during and following the IPO.
— Ron Richards of First Security Van Kasper.
Ron discussed how companies can identify and select an appropriate investment banking firm for the IPO. In particular, Ron provided advice on how companies should present themselves to investment banking firms, and at which stage of company development (and how that may have changed for Internet companies). He further advised on the key issues management should consider in selecting its bankers, what bankers are looking for in the companies they underwrite, how bankers work with the Company to set the value of the stock, the size of the offering, the shares to be issued in the registration, and whether and how companies can procure institutional financing leading up to the IPO. Ron also generally addressed the bankers role in the IPO process, and how they work with management, the lawyers and the accountants through the offering.
— Bruce Krogstad, NASDAQ Stock Exchange and Jim Coufus, Speer, Leads & Kellogg.
Bruce and Jim addressed how regional and national stock exchanges select companies for listing, including identification of the qualitative and quantitative listing requirements on the various Exchanges. Bruce focused his comments on the NASDAQ/Amex - the type of companies that list on these exchanges, listing requirements, rules NASDAQ has adopted to control the huge price swings in technology stocks driving by internet issues, recent trends in the types of companies listing - and how NASDAQ listing criteria and company support/reporting may have changed with the increase in new internet companies going public. (Sorry no paper available - please visit the SLK web site.)
Jim focused on the market making function filled by Leads Kellogg, the general differences between listing on an electronic exchange such as NASDAQ and the specialist system used on the NYSE - and compare the attraction of listing on NASDAQ against listing on the NYSE for newly public technology companies. Jim also commented on the effect of globalization on the trading of technology securities - and what, if anything, public companies can do to isolate themselves from the effects of depressed trading prices in foreign markets. Most importantly, Jim talked about how market makers works with their clients, what market makers typically look for in the companies they take on as clients, and when young companies should approach market makers when planning for an IPO. Jim also commented on what relationships and resources market makers might bring to newly public companies (such as investment relations advice, and planning for new secondary issuances) - and trends Jim has seen in the past year on the types of new companies listing, and the special requirements of internet companies. (NYSE Information)
— Robert Zalaudek of the Vancouver Stock Exchange, and a VSE underwriter and lawyer
This was a 45-minute panel discussion on taking technology companies public on the VSE as an alternative to US public offerings. Robert presented together David, Michael and Neil working with companies listing on the VSE. The points this panel covered included: (a) why the VSE is known as the "venture capital" public exchange, what are the listing criteria for listing companies, and (aside from the listing criteria itself) how mature and what are the qualitative requirements for listing, (b) what are the advantages/disadvantages of listing in Canada before listing in the US, (c) how does the VSE position itself relative to the Alberta, Toronto and Montreal Exchanges, (d) what about the burden of being a reporting company in Canada - and does this distract management in, for all practical purposes, emerging growth companies, from "running the business", (e) what about the threat of lawsuits for young companies with no sales, revenues or defined operations, (f) how easy/difficult is it for companies to move from the VSE to listing in the US, and what are the tax/fiduciary implications of delisting in Canada in preparation for a listing in the US, (g) is it preferable for a mature VSE company, once it has matured to the point where it can list in the US, to delist in Canada and then list in the US - or to list in both countries, (h) what about issues of conforming with financial reporting, securities regulatory and corporate law compliance between the US and Canada, both for US-based companies that are only listed on the VSE, and for companies listed on both the VSE and on US exchanges, (i) special VSE programs intended to address the unique needs of US companies listing on the VSE, and (j) trends/examples of US companies that have successfully transitioned from an initial listing on the VSE to then listing on a major US exchange.
— Vimal Vaidya of Internet Tools/Axent
Vimal has successfully built two internet startups specifically for the purpose of selling these companies to larger public company competitors: the first company was neTrend, which Vimal sold in 1997 to On technology for approximately $10 million, and most recently Vimal sold a second company, Internet Tools, this year to Axent for approximately $26 million. As a contrast to IPOs, Vimal spoke generally about each of these acquisitions, covering the following points: (a) how to identify a market niche and define the business for a company built for acquisition, (b) what about issues of demonstrating product feasibility and initiating distribution - and how far do you go before shopping the company?, (c) what issues should you be concerned about before presenting the Company to potential acquirors?, (d) how to find a good investment banker to shop the Company, what kind of deal to make, and how to get attention as a small technology company without revenues or profits?, (e) tax issues, how to time long-term capital gains treatment, and issues on holding the acquiror's stock, (f) how to minimize restrictions in non-compete provisions, and work around the restrictions, (g) pooling issues and mistakes to avoid, and (h) integrating the business with the acquiror's business - and making it work for everyone. Most important, Vimal addressed valuation issues - how to negotiate price and what are the valuation milestones in an acquisition that acquiror's pay most attention to. (Sorry, no paper available)
