LEXPERT MAGAZINE
|
JANUARY/FEBRUARY 2018 57
| GOING PUBLIC |
this: the typical working group for an IPO,
once the auditors have finished their work,
includes company management, their law-
yers, the underwriters and the underwrit-
ers' counsel.
Everyone works on the prospectus de-
scribing the business and its growth strat-
egy. At large draing sessions, there may
be more than a dozen people in the room
all working on the document at the same
time, and lawyers say the meetings can be
long and sometimes fractious.
It's not only stressful for the business
stand that what you're saying is correct and
they're going to follow your guidance."
Given all the rules, regulatory require-
ments and costs, some entrepreneurs or
longtime business owners get cold feet
partway through the process. "ere are
always things that come up that people
may not have understood at the beginning
that they have to do," says Parker, "or issues
come up in the middle of it that throws
them for a loop. Dealing with the under-
writers and their expectations can scare
some clients off mid-process.
"Sometimes businesses have an expec-
tation of where they're going [on pric-
ing] because of what underwriters have
said to them at pitch meetings, and all of
a sudden that changes halfway through
the deal. It's inevitable that it happens,
but sometimes it gets very discouraging
for people because they thought it was
one thing and then it turns out it's some-
thing entirely different. It's not necessarily
something we can prepare them for, but I
always try to tell people there are going to
be dips in the road."
e underwriters may assign an initial
valuation on the company's shares of $15,
for example, but intervening factors —
changed market conditions, investor ap-
petite for the sector, or some news about
the company itself — can then prompt the
underwriters to reevaluate and reprice the
shares sharply downward.
"at's a difficult conversation to have,
but sometimes that does happen and some-
times owners decide, 'Okay, it's not worth
it. I'm not going to do it. I'm going to wait.'
So we put it on the shelf. at's happened a
lot of times."
"Stress" is a word that keeps coming up in
relation to IPOs. Joseph Garcia of Blake,
Cassels & Graydon LLP in Vancouver says
the keys to helping a client minimize that
stress lie in advanced planning and orga-
nization. Ideally, he says, the client would
start talking to their lawyer about going
public a year or so before they plan to go to
market. e moments of intense stress gen-
erally come when there isn't enough time,
he says, when everyone is trying to rush the
process and catch what is perceived to be a
limited window.
"ere are a whole host of issues that you
need to address, and the more time you
owners. Andrew Parker, co-head
of the national capital markets
practice at McCarthy Tétrault
LLP, which recently did the IPOs
for Jamieson Wellness and Fair-
fax Africa says the workload can
become so intense that, at times,
the team has to work through
the night. He says he likes to
send people home for even two
or three hours to rest a little "so
their brains aren't too fried the
next day.
"Personally, I've walked into
my house as my kids were going
to school, had a shower and gone
back to work 45 minutes later."
In addition to draing the pro-
spectus and taking care of other
legal and regulatory nuts and
bolts, Parker says "you have to
educate the client about the [secu-
rities] rules, disclosure, what's ma-
terial, and make sure they're con-
sidering all of that." Also, in cases
where a business person is taking a
company public for the first time, the law-
yer's role includes doing some handholding
at times when clients feel overwhelmed.
And they will, he says.
Parker says doing an IPO is different
than most other types of corporate trans-
actions. "Sometimes it takes lots of reassur-
ance, and making sure they disclose every-
thing to you, and that they understand the
rules. at's true in any IPO. ey want to
make sure they're doing the right thing.
Your goal as the lawyer is to become the
trusted advisor to make sure they under-
JOSEPH GARCIA
>
BLAKE, CASSELS & GRAYDON LLP
"Successful IPOs often come
down to the preparation. If you
don't help the client plan, you might
cause delays, you might lose
the window to go public."
