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Initial Public Offerings an Issuer’S Guide (European Edition) OTHER RECENT PUBLICATIONS PREPARED by OUR LONDON CAPITAL MARKETS PARTNERS INCLUDE

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Initial Public Offerings an Issuer’S Guide (European Edition) OTHER RECENT PUBLICATIONS PREPARED by OUR LONDON CAPITAL MARKETS PARTNERS INCLUDE July 2014 Initial Public Offerings An Issuer’s Guide (European Edition) OTHER RECENT PUBLICATIONS PREPARED BY OUR LONDON CAPITAL MARKETS PARTNERS INCLUDE: October 2013 Convertible Bonds An Issuer’s Guide (European Edition) CONVERTIBLE BONDS – AN ISSUER’S GUIDE (EUROPEAN EDITION) Authors: James Taylor and Robert Flanigan October 2013 High Yield Bonds An Issuer’s Guide (3rd Edition) HIGH YIELD BONDS – AN ISSUER’S GUIDE (3RD EDITION) Author: Bernd Bohr Private & Confidential December 2013 Listing an Overseas Company on the London Stock Exchange A Guide to Listing on the London Stock Exchange LISTING AN OVERSEAS COMPANY ON THE LONDON STOCK EXCHANGE – A GUIDE TO LISTING ON THE LONDON STOCK EXCHANGE Author: Greg Stonefield PLEASE CONTACT US IF YOU WOULD LIKE TO RECEIVE PDFS OR HARD COPIES OF THESE PUBLICATIONS. This document is not to be disseminated or copied to anyone without our consent. It is to be used solely for the purpose of making a determination on the provision of legal services and for no other purpose. CONTENTS Page INTRODUCTION 1 GETTING READY 4 OFFER STRUCTURE 13 KEY DOCUMENTS 16 KEY PARTIES 32 CERTAIN SECURITIES LAW CONSIDERATIONS 35 ONGOING OBLIGATIONS AS A PUBLIC COMPANY 45 INDICATIVE TRANSACTION TIMETABLES 55 EXHIBITS ANNEX I: Minimum Disclosure Requirements for the Share Registration Document 64 ANNEX II: Pro Forma Financial Information Building Block 77 ANNEX III: Minimum Disclosure Requirements for the Share Securities Note 79 ANNEX XXII: Disclosure Requirements in Summaries 86 GLOSSARY 95 If you have any questions about initial public offerings, please contact the authors of this guide or any of the other key members of our European equity capital markets practice listed on the following page. Bernd Bohr Robert Flanigan Partner Partner [email protected] [email protected] 201 Bishopsgate 201 Bishopsgate London EC2M 3AF London EC2M 3AF United Kingdom United Kingdom T +44 20 3130 3640 T +44 20 3130 3488 F +44 20 3130 8760 F +44 20 3130 8760 Greg Stonefield Partner [email protected] 201 Bishopsgate London EC2M 3AF United Kingdom T +44 20 3130 3103 F +44 20 3130 8774 OTHER KEY MEMBERS OF OUR EUROPEAN EQUITY CAPITAL MARKETS PRACTICE INCLUDE: Kate Ball-Dodd Ulrike Binder Partner Partner [email protected] [email protected] T +44 20 3130 3611 T +49 69 7941 1297 F +44 20 3130 8760 F +49 69 7941 100 Robert Hamill Partner [email protected] T +44 20 3130 3558 F +44 20 3130 8779 INTRODUCTION For most companies and their owners, an initial public offering (IPO) is a “once-in-in-a-lifetime” event that may represent the culmination of many years of hard work. The IPO may provide both the shareholders and management of the company with a significant sense of accomplishment and will arguably be one of the most important milestones in the corporate evolution of a company, for its owners, management, employees and other stakeholders. An IPO, however, will also frequently bring with it a sense of upheaval as significant changes are often required to be made to the way a company operates and conducts itself – membership of the new “public” world brings with it legal and compliance obligations that need to be both understood and complied with. This guide provides an overview of some of the key issues that we believe all directors, members of senior management, general counsels and other key decision makers of a potential IPO candidate should be familiar with. However, it is not intended as a comprehensive treatment of the subject matters covered by the guide or of all matters relevant to an IPO. This guide is also not intended as a substitute for legal advice and we encourage our readers to reach out to the authors of this guide, any of the other key members of our European Equity Capital Markets Practice listed in the back of this guide or any other regular contact at Mayer Brown before taking any action with respect to the matters discussed herein. WHAT ARE THE REASONS AND POTENTIAL BENEFITS OF CONDUCTING AN IPO? There are a number of different reasons why a company and its owners may consider an IPO and the listing of its shares on a stock exchange. Common reasons for an IPO include, but are not limited to: y the need to raise additional capital to fund further growth of the company, either organically or through acquisitions; y the need to provide existing shareholders in the company with a “liquidity event” and an option to “exit” all or part of their investment; y the need to facilitate the transition from an “owner-managed” company to a more widely- held company with a professional (non-owner) management team, frequently in connection with succession planning in family-owned or otherwise tightly-held companies; y the desire to provide value to shareholders through a spin-off of a particular division or line of business; and/or y the desire to enhance the profile and standing of the company with customers, suppliers, lenders, other investors and as an attractive employer. Being a public company can have significant benefits, including: y access to a much broader and potentially international investor base, consisting of both institutional and retail investors; y access to the capital markets as an additional source of capital, through both subsequent equity offerings and potential debt offerings, possibly on more favorable terms than those available in the private equity or loan markets; y increased liquidity for existing shareholders (including employees of the company that may have acquired shares as part of their compensation arrangements); mayer brown x 1 y the ability to use the listed shares of the company as a potential acquisition currency; y an enhanced ability to attract and retain key talent for the company by being able to offer executive and employee compensation and incentive arrangements such as incentive shares, stock options or similar arrangements; and / or y a generally enhanced company profile and increased confidence in the company by investors, creditors, customers, suppliers and other stakeholders in the company, deriving from its status as a public company and the enhanced transparency and disclosure that comes with that status. WHAT ARE THE POTENTIAL COSTS AND OTHER POTENTIAL DOWNSIDES OF CONDUCTING AN IPO? While being a public company can offer many advantages, the owners of a private company should not take the decision to conduct an IPO lightly and will need to carefully consider the various downsides that can come with being a public company, including: y the costs resulting from an IPO, i.e. both in connection with the IPO itself as well as the ongoing costs of being a public company, including costs of maintaining a public company board and management team, costs of ongoing reporting obligations, listing fees. costs of the company’s auditors, costs of legal advisers and general compliance costs; y the loss of control by the existing owners (in terms of having to deal with other shareholders, adhering to a new set of rules and regulations and being susceptible to market conditions) and increased transparency (including disclosure of beneficial shareholders and increased transparency with regard to related party transactions); y the potentially significantly increased compliance burden; and y exposure to potential scrutiny and activism by public shareholders. IS YOUR COMPANY READY FOR AN IPO? Once the owners of a private company have determined that the benefits of ”going public” outweigh the downsides, the company and its shareholders, together with their respective financial, accounting and legal advisers, will need to consider whether it is ready for an IPO or whether the company would benefit from remaining a private company, at least for the time being. The ideal IPO candidate tends to exhibit some or all of the following characteristics: y a clearly defined strategy and growth story for the company; y a track record of sound financial performance and a solid balance sheet; y market leading positions and favorable industry trends / growth prospects; y a large potential customer base and products or services that are attractive and accepted by the market; and y an experienced management team with a proven track record. 2 x Initial Public Offerings The company’s “equity story” will need to be considered - investors will need to be provided with facts, figures and details as to why they may wish to consider purchasing shares in the company. The financial advisers together with the company and its owners will develop the equity story by focusing on the position of the company as a growth or income play, its position within its market and sector, its strengths, strategy, track record and business plan together with macro data. All of this will need to be clearly and convincingly outlined in a management presentation or other document at the outset of the process for the benefit of the financial and legal advisers involved in the proposed IPO. Management will need to ensure that any key assumptions and projections are supported, to the extent possible, with independent information, to allow the company’s financial advisers and/or underwriting banks to assess the feasibility of an IPO. mayer brown x 3 GETTING READY Prior to “going public”, the owners and management of a potential IPO candidate, in consultation with their advisers, will have to put in place a corporate governance structure and other internal procedures and guidelines that are suitable for its life as a public company. In addition, the period leading up to the IPO is also an opportune time to consider what, if any, modifications, changes or amendments the owners and/or management of a potential IPO candidate may consider making to the company in the near- to long-term.
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