Page 70 - Initial Public Offering - An Introduction to IPO on Wall Street

regularly to work closely with investment banks.

Capital market analysts provide businesses with unbiased and impartial guidance on key value-
driving choices and assessments in the IPO process. The consultants for the capital markets are
not in conflict with the underwriting banks. Instead, they aim to help management choose a
consortium of banks that support each other and usually give recommendations to management
about how to get the most out of their investment banking service providers.

There are two main duties of the capital markets advisor:

1. Facilitating the company in its planning before the investment banks are approached and
engaged, including: providing guidance on how to better adapt the equity narrative of the
business for a new and wider market and assisting to calculate valuation expectations.

2. Assisting the business in the choice of the underwriter (selecting the banks), the
arrangement of the underwriter cartel (figuring out the number of banks and duties), the
economy of the cartel (remuneration for the banks, including bonus mechanisms, fee splits,
and gross spread) and the completion of the subscription agreement.

If the investment banks have been chosen, the position of the capital markets consultant
changes to that of a process management specialist and an impartial listening ear on key value-
driving decisions.

Capital market consultants can advise management about how advisors and/or entities involved
in the deal can resolve possible disputes and provide input into how to better manage the cartel
to assure the underwriters collaborate together for a shared objective. They can also provide
expert perspectives, including the below, on key value-driving aspects of the IPO process:

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