Going Public 471present the company, discuss and answer questions concerning the prospectus,
and make the company story palpable to the people whose support is essential
to sell the offering. Management typically makes a highly orchestrated half
hour presentation, supported by a PowerPoint or similar screen presentation.
Because the company is still in the waiting period and (generally) only the
prospectus can be utilized as a written presentation of the company’s
prospects, no written materials are distributed. The managing under writers
had booked two and a half weeks of in-person meetings, mostly at breakfast
and lunch time when securities professionals and significant investors are most
available, in cities all across the United States, with a brief two-day trip to
London.
Perhaps the fastest evolving and most confused aspect of the going public
process is the road show procedures, in light of technological advances. Road
show sessions are now permitted to be accessed online with the Internet, and
the SEC and the under writing community is grappling with the ground rules
for such access. At present, there are no general rules and regulations as to the
types of potential investors who may participant in an Internet road show, al-
though the trend seems to be toward opening road show participation to in-
creasingly less sophisticated investors. It is quite possible that this trend will
continue so as to open road shows to all interested parties, and if Internet road
shows are open to everyone, then the in-person road show seemingly could also
be fully attended. The attorneys for the under writers have written to the SEC
and obtained specific permission to permit the Internet streaming of several of
the United States road shows to selected retail investors who are securities cus-
tomers of the underwriting syndicate, which investors will be given a password
to a Web site in order to participate. Because of the prohibition against utiliz-
ing any writing other than the prospectus during this “cooling off ” period, In-
ternet participants will be prohibited from downloading the PowerPoint
presentation which will be made by the company management.
Throughout this period, the under writers gather indications of interest
for the purchase of stock. They also receive feedback as to the proposed range
of pricing, which ref lects the market value that will be placed on the company
and will be ref lected in the per share price. In dialogue with the team, and
with approval of the board of directors, just prior to final clearance from the
SEC the managing underwriters fix the per share price at which company
common stock will be sold in the IPO.
Meanwhile, the SEC staff has reviewed the amended prospectus, and has
been satisfied with the response it has received to questions it has addressed to
management and to the accountants. It has indicated that the IPO can pro-
ceed. Pursuant to SEC practice, the under writers may now file a final regis-
tration statement (with fresh financials if needed), which for the first time
will contain the actual per share purchase price, the aggregate proceeds to the
company and to selling stockholders, and the specific dollar amounts for the
under writer discount (the commission that the under writers will receive on
the sale of the shares). This “pricing amendment” by SEC regulation will take