Page 68 - Initial Public Offering - An Introduction to IPO on Wall Street

4.4.2 Company Personnel

The extent of involvement of a business in the process of preparing the registration document
generally depends on the competence of the employees of the organization, while external
counsel would usually play a significant role in the drafting process. In any event, company
workers would need to provide the requisite details for the preparation of the application and
be actively engaged in all phases of the registration process.

The level of dedication a public offering would require of its employees should not be
underestimated by a corporation. The method needs a great deal of commitment from an
organization and is likely to divert workers from the company's everyday operations. It is
necessary to note that this is prevalent in an IPO and can involve the recruiting of additional
workers in some cases. The dedication of a team to the offering process would be the difference
between a strong IPO and a futile attempt.

4.4.3 Securities Counsel

There must be the appropriate synergy between an executive team and the business's securities
counsel, as is the case with any appointment of people to provide professional services. The
solicitor of an organization will become the protagonist of their registration process.

The solicitor of a business must be highly qualified and have the ability to describe technically
difficult concepts and details of complex transactions effectively. He or she must have the
capacity to rapidly review vast volumes of data and produce documents.

Organizations need to find a law firm familiar with both the IPO process and their business.
This is a firm that the organization is sure will safeguard its interests when working with the
underwriters and SEC employees. In addition to securities counsel, investment bankers will
select counsel of underwriters to facilitate the IPO process.

4.4.4 Investment Banker or Underwriter

Without an underwriter, businesses may go to the market, but the method is so complicated
and the know-how is so specialized that it rarely happens. The stock-in-trade of underwriters
is, for most individuals, dynamic market problems that they are unfamiliar with. Therefore, it
is in the best interest of an organization to benefit from their expertise. The guarantee that an
IPO will be adequately handled and effectively promoted and funded, both prior to and after
going public, should be seen as the value added by an underwriter.

The underwriter in charge collaborates with the organization to establish the statement of
registration, arrange the roadshow, underwrite some risks and create a syndicate. This syndicate
is made up of a group of underwriters who carry the burden of the group of underwriters and
of the group of sellers. The selling group demands attention from its retail and institutional
customers, sells inventory once an IPO is successful, and offers aftermarket support. In the
prospectus, the share allocation each underwriter is dedicated to buying is indicated.

In general, underwriters exist in three sizes: "bulge bracket" investment banks that are
multinational powerhouses that provide large customers around the world with a wide variety
of services, "boutique" banks that are smaller and mostly specialize in a specific industry or
financial product market, and regional companies and local banks that support smaller issuers.

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