Page 88 - Initial Public Offering - An Introduction to IPO on Wall Street

Before the effective date of the statement of registration, a provisional prospectus can be
submitted to interested organizations or individuals.

Before issuing the provisional prospectus to investors and becoming effective, the statement of
registration must be updated to include all details provided by Regulation S-X. Before SEC
comments have been issued, checked, and integrated into the draught prospectus, businesses
are now advised not to publish the provisional prospectus. SEC rules mandate that this
prospectus be significantly consistent with the provisions of the 1933 Act and that the title
"Preliminary Prospectus" be on the cover page.

This terminology was expected to be written in red ink (hence the word 'red herring') before
the final rollout of EDGAR. On the cover, the following statement must be written in a manner
as broad as that commonly used in the prospectus body:

“Information contained herein is subject to completion or amendment. A registration statement
relating to these securities has been filed with the SEC. These securities may not be sold nor
may offer to buy be accepted before the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of these securities in any state in which such offer, solicitation, or sale would
10
be unlawful before registration or qualification under the securities laws of any such State .”
SEC rules also specify that the offering price, underwriting concessions or fees, fees of or
concessions to dealers, the total earnings, or other matters contingent on the offering price can
be excluded from the preliminary prospectus.

Financial Analyst Meetings or Roadshows

An underwriter arranges meetings, called roadshows, with financial experts, dealers, and
prospective institutional investors for potential shareholders to learn about the venture. In
general, these discussions are attended by the top executives of the organization and can take
place at different locations nationwide and across the globe.

For these meetings, the management team needs to be well organized. Doing this is incredibly
important. Executives must not presume that the prospectus is capable of standing on its own
instead of expecting and understanding the answers to possible questions regarding the
company's specifics.

The reputation of a management team during its pitch and its ability to react to the queries of
prospective investors and dealers would have a significant impact on the offer’s’ success.

The roadshows are a vital part of the sales activities of a company, as it is here that a
management team encourages the involvement of institutional investors in the deal. This can
be a very grueling process because, with many meetings a day, the roadshow could last up for
up to two weeks.

Furthermore, an organization should not disregard the fact that it becomes more challenging to
spark the attention of institutional investors in an open marketplace if they undergo three to
five identical sessions a day.

Undoubtedly, in training an executive team for these meetings, underwriters will play a vital
role. Besides, several businesses have requested help from professional associations for

10 https://www.sec.gov/Archives/edgar/data/1799178/000152862120001675/s6wrap.htm

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