This Euromoney Training programme is designed to enable you to become proficient in their understanding of the IPO process. Bankers, investment managers, company executives, managers and professionals in all corporate functions and in organisations servicing corporates need to have a current understanding of the financial issues that affect the process of launching an IPO. Covering a broad spectrum of topics, the course is designed to ensure that participants are equipped with the financial skills-set necessary to understand how IPOs are arranged, managed, priced and distributed.

How will this course will assist you?

At the end of the course, participants will have a sound understanding of:

• How companies are selected for IPO.
• How companies are restructured to meet listing requirements.
• The timetable and essential due diligence procedures preliminary to IPO.
• How to value companies for IPO.
• How companies are marketed to investors.
• Bookbuilding – the essential issue process.
• How IPOs are underwritten.
• The different techniques available for secondary offerings.
• What corporate governance issues are important in presenting a company.
• The aftermarket.
• The role of the analyst.
• The impact of new regulations (post the global settlement) on IPO processes.

Who Should Attend?

• Equity and Fixed Income
• Investment and Commercial Bankers
• Investment Managers
• Investment and Equity Analysts
• Credit Analysts
• Credit Controllers
• Treasury Managers
• Financial Legal Counsel
• Head of Equity
• Head of Treasury

Supported by:

DAY 1

IPO Preparation and Planning

Session 1 – The decision to float

• Exit strategies for existing shareholders.
• Strategic considerations: float or sell?
• Evaluating the alternatives: the advantages and disadvantages.
• Pre-conditions to a flotation: not all companies are suitable.
• Selecting financial advisers.
• The role of the analyst.
• Financial requirements necessary to float.

Case study

• Critical examination of possible flotation candidates.

Session 2 – The due diligence process

• The objective of the due diligence exercise.
• The long form report.
• Legal due diligence.
• Investigation of the suitability of directors.
• Evaluating the competitive position.
• Accounting policies and window dressing.

Case study

• Due diligence issues in a pharmaceutical company.

Session 3 – Restructuring and prospectus issues

• Essential corporate restructuring steps pre-IPO.
• Selecting the appropriate capital structure.
• Organising the issuer to provide the resources.
• Timetable considerations.
• Prospectus responsibility – whose?
• Listing requirements – selecting the right exchange for the flotation.

Exercise

• IPO examples: lessons to be learned.

Session 4 – IPO documentation

• Senior versus junior market (AIM versus LSE).
• Documents needed.
• Detailed timetable content.
• Lock-up agreements.
• American depositary receipts (ADRs and Global DRs).
• Prospectus responsibility – whose?

Exercise

• Review of key documentation.

DAY 2

IPO Valuation and Marketing

Session 1 – IPO valuation

• Capital structure and its impact on value.
• Weighted Average Cost of Capital (WACC).
• Valuation using WACC.
• Capital Asset Pricing Model (CAPM).

Case study

• Computation of cost of equity, cost of debt, WACC, regearing beta.

Session 2 – Using WACC

• Preparing cash flows.
• The forecast and terminal value periods.
• Calculating cost of equity.
• Calculating WACC.
• Selecting beta.

Case study

• Computing WACC and adjusting for differences in gearing.

Session 3 – IPO valuation based on WACC

• Growth rates in the terminal value period.
• Common mistakes in WACC.
• Forecasting reinvestment.
• Return on invested capital.
• Pre-IPO research.

Case study

• Spin off valuation using WACC.

Session 4 – Multiple based valuation methodologies

• The Price Earnings Ratio (PER).
• Valuation using PER.
• Comparable company analysis.
• Theoretical background.
• Strengths and weaknesses.
• Alternative multiples.
• Ratios based on Earnings Before Interest and Tax (EBIT).

Case study

• IPO valuation using PERs and EBIT ratios.

DAY 3

Marketing and Underwriting the IPO

Session 1 – Valuation of special case companies

• Valuation of companies with sales but no profits.
• Valuation of companies with no sales.
• Valuation of mining companies.
• Valuation of property companies.
• IPO bubbles.

Exercise

• Participants value a series of non-standard IPOs.

Session 2 – Accounting scams: investors beware!

• The nature of accounting - science or alchemy.
• Manipulating the balance sheet.
• Window dressing.
• Off-balance sheet items and their significance.
• Revenue recognition and how to make sales 'take-off'.
• Maximizing profit by minimizing costs and expenses.
• Fraud - can it be detected?

Case study

• Discussion of an SEC report into a fraudulent accounting scheme.

Session 3 – Marketing the IPO

• Bookbuilding/placing as an issue method.
• Offers for sale as an issue method.
• Introductions.
• The role of the analyst.
• Roadshows and company visits.
• Preparing the management.

Case study

• Participants examine possible IPO candidate to highlight their investment strengths.

Session 4 – IPO Underwriting

• Hard and soft underwriting.
• The financial risk in underwriting.
• Underwriting as an option.
• Competition issues in fees charged.
• Underwriting in public offers.

Case study

• Review of the underwriting risk in a bookbuilt issue.

DAY 4

Post IPO Issues

Session 1 – IPO abuses in the TMT boom

• In-house financial analysis.
• Third party research.
• Bidding or indicating interest.
• Aftermarket orders – a possible abuse.
• Other abusive practices covered in the Global Settlement.

Case study

• Participants examine abuses in the TMT boom.

Session 2 – New developments in IPO business

• Competitive underwriting – the London experience.
• Beating the cartel: the Open system.
• Accelerated IPOs – an exit for private equity and other vendors.
• Investment vehicles – now outlawed.

Case study

• Participants analyse the terms of sample offerings using these new techniques.

Session 3 – Secondary offerings

• Pre-emption rights.
• Underwriting.
• Deeply discounted issues.
• Timetable.
• Other secondary offerings.
• Accelerated book building.
• Pricing.

Case study

• Participants analyse the rights issue of major international companies.

Session 4 – Using shares for acquisitions

• Computing the effects on financial statements.
• Impact of financing methodology.
• Bridging as an important option.
• PER of cash/debt.
• Assessing the effect of synergies.

Case study

• Participants analyse the financing options for a major mining acquisition.

• Paul Richards

  Paul Richards graduated from Cambridge University in mathematics and has a Masters degree in business administration from London Business School. He is also a CFA charter holder, an Associate of the Chartered Institute of Bankers, a Member of the Association of Corporate Treasurers and a Fellow of UKSIP.
  
  Paul has more than 20 years investment banking experience specialising in domestic and international corporate finance at UBS (Warburg), HSBC and Map Securities (part of Skandia Insurance and Mapfre, Spain). He was also the chief executive of the London merchant banking operation of Credit Industriel et Commercial, a major French banking group.
  
  As a result of this experience, Paul has extensive first hand experience of: Mergers and acquisitions; IPOs; bond issues; secondary market issues; privatisation; debt syndications; corporate treasury; equity valuation; investment analysis; security and derivative valuation; private equity; modelling; corporate governance; and compliance. 
  
  Paul won the 2004 Wincott Foundation Prize for his article "Lessons in shareholder value" on the boom and bust in new economy stocks, published in Professional Investor (the journal of the UK Society of Investment Professionals - the UK member society of the CFA Institute). He has taught MBAs and Masters to Finance students at Cass and Cranfield Business Schools for more than 12 years in a range of financial disciplines; and has trained staff at major City houses and in banks on different continents.

  Courses run by this instructor

  • Mergers and Acquisitions

IPOs: Managing, Underwriting and Pricing

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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