Earnings Forecasts

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Group E Elizabeth Edward Geoff Smith Hasan Raza Rony Suthermaraj. Earnings Forecasts. IPO. Initial Public Offering Initial Considerations Pre-Transaction Preparation and Organization Drafting and Filing of Preliminary Prospectus The Regulatory Review and Marketing Phase - PowerPoint PPT Presentation

Text of Earnings Forecasts

SportsGoodStop Company

Earnings ForecastsGroup EElizabeth EdwardGeoff SmithHasan RazaRony SuthermarajIPOInitial Public OfferingInitial ConsiderationsPre-Transaction Preparation and OrganizationDrafting and Filing of Preliminary ProspectusThe Regulatory Review and Marketing PhaseThe Final Prospectus PhaseClosing

-Discuss Pros and Cons of becoming a public company with client

-Discuss methods of going public in Canada

-Provide overview of regulatory environment for the public offering of securities in Canada

-Provide overview of the process including discussion of pre-transaction preparations, cost considerations etc.

-Discuss legal consequences of becoming a public company

2. Planning should commence as early as six months before going public-creation or updating of a business plan

-assembly of the transaction team (underwriters, lawyers, auditors, printers, transfer agent)

-strengthening of the board of directors

-corporate restructuring

-tax planning for shareholders

-the creation of new shares

-the creation of a stock option plan

-the review of accounting policies and financial records

-the review and/or settlement of outstanding litigation involving the company

-the review of material contracts

-the compilation of due diligence materials whether in hard copy or virtual data room

Underwriters host a formal organizational meeting to launch the process

3. To complete a public offering, the company must clear a prospectus with the securities regulators. As mentioned above, the prospectus performs a dual role: (a) it is a marketing document pursuant to which the business story is sold to prospective investors; and (b) it is a consumer protection document designed to give prospectus investors "full, true and plain disclosure of all material facts relating to the securities being sold

A prospectus is often created in a manner that balances this dual role. To guide the company in including full disclosure of all material facts, the company must comply with, among other things, National Instrument 41-101 General Prospectus Requirements

The principal sections of a prospectus include:The Face Page A snap shot of the terms of the offering and the parties to the offering as well as the required warnings and disclaimers Prospectus Summary A summary of the terms of the offering, the companys business and financial information, use of proceeds of the offering and risk factorsGlossary Used to define technical terms, most commonly found in a prospectus relating to a technology, biotech or resource companyIndustry Overview Describes the industry in which the companys business is carried on including a discussion of the nature and size of the market for the Companys products and services and any key industry trendsDescription of Business Describes all aspects of the companys business including a description of its products and services, its growth strategies, its competitive advantages, its customers, its research and development, its intellectual property rights, its sales, marketing and distribution activities, its facilities, its employees, the regulatory environment in which it operates and its competitionMD&A Managements discussion and analysis of the companys results of its operations and financial condition is required to be disclosed. The form of MD&A is set out in 51-102F1 Managements Discussion and Analysis. Selected Consolidated Financial Information A summary of the companys audited and any interim financial statements for the requisite periods that are included in the prospectusConsolidated Capitalization The share and loan capital of the company is describedDividend Policy The companys policy regarding the distribution of dividends is described Description of Share Capital The companys authorized and issued and outstanding share capital is describedDirectors and Officers Disclosure of directors and officers including respective positions held with the company, their respective principal occupations within the preceding five years, disclosure of any corporate cease trade orders or bankruptcies, any personal bankruptcies, any penalties and sanctions imposed on them and any existing or potential conflicts of interest between the company and a director or officer of the companyExecutive Compensation Disclosure required by Form 51-102F6 Statement of Executive Compensation is includedPrincipal Shareholders Disclosure of each 10+% shareholder of the company is includedPrior Sales The number and prices of any common shares sold by the company within 12 months before the date of the prospectusUse of Proceeds The estimated net proceeds of the offering, after payment of commissions and expenses are disclosedPlan of Distribution The name of underwriters, disclosure of market out, disclosure of over-allotment, disclosure of any minimum under the offeringRisk Factors The risk factors material to the company that a reasonable investor would consider relevant to an investment in the securities being distributed such as cash flow and liquidity problems of the company if any, experience of management, the general risks inherent in the business carried on by the company, environmental and health risks, reliance on key personnel, the arbitrary establishment of the offering price, regulatory constraints, economic or political conditions and financial history, among others Interest of Management and Others in Material Transactions The nature and approximate amount of any material interest of any director, executive officer, principal shareholder within the three years prior to the date of the prospectus is describedMaterial Contracts Particulars of every material contract, other than those entered into in the ordinary course of business, within two years before the date of the prospectus are includedLegal Proceedings Particulars of any legal proceedings material to the company are includedPurchasers Statutory Rights The purchasers statutory rights of withdrawal and rescission are described in the prospectusConsolidated Financial Statements The companys audited and any interim financial statements for the requisite periods are included in the prospectus (such statements to be prepared in accordance with Canadian generally accepted accounting principles (GAAP), or reconciled to Canadian GAAP, or for fiscal years beginning on or after January 1, 2011, prepared in accordance with International Financial Reporting Standards (IFRS).Certificates Certificates of the company and underwriters certifying the information in the prospectus in the required form are included

While the preliminary prospectus is being drafted, the underwriters and their counsel are conducting due diligence on the company to ensure that the prospectus does not contain a "misrepresentation" (i.e., an untrue statement of a material fact, or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made).

In general, the company and parties preparing the prospectus are held personally liable for misrepresentations in the prospectus, unless such party, other than the issuer or any selling security holder, can prove that it conducted "due diligence" and therefore had "reasonable grounds to believe" that the part of the prospectus for which it was responsible contained neither false statements nor omissions. The due diligence process is, therefore, taken very seriously by all parties and generally involves a thorough review of corporate records, financial information and material agreements as well as an inspection of operating facilities and management backgrounds. In essence, every independent fact in the prospectus must be verified and detailed records of the due diligence process must be maintained in contemplation of defending against a misrepresentation claim.

4. In the four to eight weeks prior to closing, the preliminary prospectus is vetted by the securities commission for comments. Issues are then negotiated and settled and the prospectus is changed to reflect the regulators' comments. Also during this phase the underwriters and key members of the company's management team make a series of presentations to institutional investors and investment dealers over a period of five to ten days (the "road show"). The underwriting agreement is also negotiated and finalized and an application for listing is filed with the applicable stock exchange.

5. Once all outstanding matters have been resolved with the Canadian securities commissions, clearance is obtained to file final material with such regulators. The preliminary prospectus is then updated to include any changes to the information which was provided in the preliminary prospectus, including the disclosure relating to the pricing of the offering and the information derived therefrom and any additional disclosure requested of the regulators through the review process.

Assuming the market is still receptive, and subject to any final due diligence issues and board approval, the issue is priced, the underwriting agreement is executed and the final prospectus is filed and commercially printed.

6. Closing documents are signed, the securities and the proceeds from the issue are exchanged and the company's shares begin to trade in the public market.

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