Goldman Sachs – Next Wave IPO Forum

- IPO – Heart of Goldman Sachs
o Commitment to tech
o L-T market leadership in technology financing
o Success w/ IPO franchise
o #1 M&A advisor
- Rally in context
o Restored Confidence
o Fear of missing rally
o Moderation of Volatility
- Bull vs. Bear Case
o Bull
 Government intervention working
 Economic data points are positive
 Corporate profit declines slowing
 Fear of missing rally
 Market is cheap
o Bear
 Macroeconomic data remains bleak
 Recovery slow – muted
 Corporate profits decline continues
 Intervention risk remains
 Massive inflection
 Rally lacks conviction
- What makes a good IPO?
o Formula – Characteristics
 Management
 Earnings
 Sector
 Cash-Flows
 Growth
 IPO Discount
 Track Record
 Conservative Financial Projections
o Components
 Sector
 Stage of Growth
 Earnings Drivers
 Management Track Record
 Proper sized/structured transactions
o Early companies that IPO
 “Need to be bigger”
 Scale and Profitability

 “Catalyst – Economic Stabilization - Market Easier to Access”
- Other Thoughts:
o Growth – out perform Value during rally
 Technology is a big benefactor
 Technology is up 35%
 Investors moving into later-stage cyclical
 IT Survey more positive – “Recession fatigue”
- Closing Thoughts
o IPO Market Open
o Investors Looking for new growth stories
o Supply/Demand favors issuers
- Panel – “The IPO – Lessons Learned from Senior Executives”
o Advice
 Predictability
• Very good forecast – no positive or negative surprises
 Maturity
• Space Shuttle – when you go for the IPO – don’t drop the booster rockets and fall back to earth!
 No Doubt
• Go when you go – don’t get on file and wait for the right time
o How to best achieve
 Maturity and Predictability
• Business model, expense
• CEO, CFO, Sales – good at hitting numbers
 Not to do
• Wait too long to hire good public CFO and finance team
• Stop while started
• Blame the auditors
 Cost of Compliance
• 404, SARBOX, Malpractice, Registration fees - $1-2m+
 Board – need a great board
• Need operators – not just VCs
• Difficult to change board members
 Choosing Underwriting Team
• Pick one horse
• Other firms may give you more research following
 Road-show Process
• Grueling process - Childbirth
• Don’t know until the end
• 90 meetings in 2 weeks
• International is not that important
 Public Market Pressure – Significant
• Little room for anything
• Don’t spend too much time with investors – cap at 5% of CEO time
• Hit your numbers
- Buy-side Comments
 Charles Ellwein – Capital Research Global Investors
• Focus on public - $9b Small cap fund - $660B AUM
• When looking at a company
o CEO – is this someone I can trust, consistency
o Red Flag if they don’t know their business well enough
 Ajay Diwan – Seligman Investments
• Cross-over investments (public and private)