It——Ipo Process

Factors in selecting comparables: growth, margin, risk

Multiplier one point lower due to differences in operations, 1 point lower for customer concentration 40% revenue from Nortel, 1 point lower for IPO discount.

Must build the context in order to value an entity/ Informed adjustments to trading multipliers of comparable companies→ franchise strength/float/perceived management strength/margins/relative growth rate.

DCF has zero weight.

“Hockey stick”: Growth in revenue across time: Design (zero growth), commercialization (low growth), and volume production phases.(DARSys) (impact on valuation?)

“Growth dilution”: for the same number of shares, waiting longer for growth may earn lot more.

Short selling: sell a security you don’t own→ borrow it to sell→ creating a duplicate owner→ market mechanism for correcting prices when it is overpriced→ have to cover any dividends if an ex-dividend date occurs during short period(risk)

The basics: Expect prices to decline→ make money by buying back at a lower price an closing out short.

What dividend policy? →look at the dividend yield?

Positioning/ value / prepublic offering: capital structure and dividend policy/offering size/ IPO pricing/ IPO design/ placement/company’s business model strategy/industry

Exchange fragmentation: companies has listed in many exchanges thus dilute the trading volume, (companies mainly trade in where liquidity is high). So the exchanges consolidate.

Non-offering public listing→ Australia and lodon Ex→generally foreign securities listed via ADRs.

Why TSX do

Merits of non-offering public listing for TSX:

No precendents in north America

Given the potential number of shares to be sold, too many then must do offering?

Doesn’t create demand for the shares. →non offering public listing is not viable

Designing or marketing an IPO

IPO filing price range/ fully distributed trading value/size/ discounts-magnitude and reasons/

P/E to G approach to valuation...