Eisner hosted a panel seminar on December 1, 2009, titled “Is Your Company Ready to Go Public?” The event was designed to educate CEOs and CFOs about the process of going public and the steps that need to be taken to successfully undertake the initial public offering (“IPO”) process. Michael Breit, head of Eisner’s services to public companies group, moderated the event.
The panelists were:
Peter LaFlèche of Morgan Joseph & Co. Mr. LaFlèche is a managing Director and head of the firm's consumer and leisure industry group. Mr. LaFlèche has over 20 years of industry experience. Morgan Joseph & Co. Inc. is a full service investment banking firm with over 130 employees and offices in twelve cities dedicated to serving middle market companies. The firm's primary focus is on providing financial advisory and capital raising services in the U.S., Asia and Europe.
Steven Dryer of Arent Fox. Mr. Dreyer is a partner in the corporate practice at the firm. He represents various public and private companies in connection with their merger and acquisition, joint venture, capital formation and commercial contractual activities. As a member of the construction group, Mr. Dryer attends to the merger & acquisition, licensing, corporate and contractual needs of architectural and engineering clients of the firm.
Eric Altstadter of Eisner LLP. Mr. Altstadter is partner-in-charge of the firm’s Long Island practice and a member of the services to public companies group. Mr. Altstadter has helped numerous clients through the complex financial reporting and compliance issues associated with the filing of registration statements with the Securities and Exchange Commission and raising capital from other sources.
Neil Goldenberg of Eisner LLP. Mr. Goldenberg leads Eisner’s internal audit and risk management services group which specializes in independent internal audit, Sarbanes-Oxley Section 404 compliance and monitoring, information technology risk, SEC accounting and reporting advisory services, and evolving corporate governance matters. Mr. Goldenberg is also the partner-in-charge of the technology assurance and advisory services practice at Eisner.
Mr. LaFlèche began the panel with a discussion on the current IPO market conditions, which, in general, show signs of improvement with significant indicators showing a rebound since March 2009. Mr. LaFlèche pointed out that a number of IPO sectors including retail, energy and biotech are showing high percentage gains from a year ago. Indeed, it is possible that 2009’s total IPO issuances will exceed 2008 because last year’s 4th quarter was especially quiet for IPOs. “The IPO window is open”, Mr. LaFlèche said.
Mr. Breit directed the following questions to the speakers:
What do you need to go public?
Mr. Dreyer provided four key points:
- Carefully build the skill set of senior management and the board members who are advising them
- Craft the ‘story’ – the bedrock message of the company that covers the products or services, the team, market size and prospects for growth
- Insist on financial statements that are complete, show a track record, and are built on and supported by sophisticated systems
- Position the company within a strong or innovative sector
When is the right time to go public?
Mr. LaFlèche answered by citing two tipping points:
- Within the company’s sector, are comparable entities doing well? Simply put: is the market ‘hot’?
- When there is a high confidence level in management and management controls, forecasts and projections become reasonable and actual results are close to projected results. Can the company’s projected growth sustain the influx of capital?
What are the financial statement requirements?
Mr. Altstadter noted that in addition to the basic audited financial statement requirements involved with preparing for an IPO, financial managers need to pay particular attention to the age of the financial statement and the need to present unaudited stub period financial statements. He also spoke about the different requirements involved with development stage companies, entities with less than three years of operating experience and entities that were created from predecessor entities or which were formed through acquisition.
What is the importance of controls and IT processes?
Mr. Goldenberg recommended that an entity carefully review its current state of internal controls and forecast its post-IPO needs. He also spoke about right-sizing – the strategy of having the right people and skills placed against systems requirements. He then spoke about Sarbanes-Oxley Section 404, stating that the management certification of internal controls remains very much in force.
What’s the role of the Board and its key committees?
Mr. Dreyer reiterated the need for the board to augment and balance the skill sets found within company management. As well, company management should expect a strong board to establish a “tone at the top” that will help direct how the company conducts its business. Critically important is having a qualified, financially literate director on the audit committee to work with the CFO as the business plan is launched. Mr. Dreyer provided details as to the requirements of outside directors serving on the three key boards: audit, compensation and nominating; as well as the values and challenges of establishing and using Advisory Boards.