People sometimes assume that the biggest factor in the selection of a Financial Printer is the upfront estimate or bid. This could not be further from the truth, as the final invoice rarely bears any resemblance to the initial estimate. The vagaries of the Registration process with its many variables contribute to a highly unpredictable process.
In an effort to educate my clients, I have assembled this bullet-point checklist of the factors that will contribute most to a successful and efficient offering:
1. Typesetting Capability
One of your biggest cost factors will be the aggregate cost of the Deal Team’s waiting time. Rapid and accurate turnaround time is paramount in keeping the Deal Team working as efficiently as possible. Look for aggregate number of typesetters in the printer’s system. This can range from as few as 10 to upwards of 1,000. More is better. With single page addressability, a printer could theoretically send your 400 page document to 400 different typesetters simultaneously if necessary, thus insuring the most rapid turnaround time. Proprietary software automatically recombines and repaginates the document while maintaining version control. Additionally, a printer should have local typesetters in each office to take care of small changes on a real-time basis. This makes a big difference over the life of the project when the Deal Team is waiting around at $5,000 an hour or more!
2. Composition Engine
Look for a true “single source” typesetting system. This system outputs on demand in Word, Edgar I or II, Typeset, XBRL or PDF directly from the source document. This “single version of the truth” eliminates the risk of edits not being carried over between proof rounds.
3. Financial Strength
Being able to weather the test of time is key. You need to know that the printer with your document on its system is going to be around throughout your entire process! Registrations can drag on a year or longer depending on their reception in the SEC and the complexity of the deal, and losing a printer midstream could be disastrous. Additionally, a financially strong printer will continue to make investments in technology, people and processes.
4. Customer Service Team
A strong and experienced Customer Service Team is perhaps the most important element to a great printer. You need folks who have been there before, and can in many ways “check your work” as you go along. They can be useful for advice that your lawyer might charge for, such as form type recommendations for various situations. They can also give you perspective on how other companies have handled certain issues. This is a group you will be working cheek by jowl with throughout the deal, and if they are learning on the job, the tuition could be expensive.
5. Post-Offering Suite of Tools
Once you are a public filer, you are subject to a whole new set of disclosure requirements. A strong suite of self service tools can help automate this process in a timely and cost efficient manner:
A Section 16 Filer- This SAAS product automates Section 16 filings. It maintains Insiders’ data, builds and validates each filing automatically, streamlines the approval process, and executes the filing with just a few keystrokes.
8K Filers- A SAAS 8-K filer is a secure, Web-based filing solution developed to allow you to create, manage and self-file Form 8-K and amendments with the SEC.
Virtual Data Room- This state-of-the-art online environment replaces the paper data room by enabling Dealmakers to bring parties together quickly and securely for due diligence.
There are small providers out there that claim to be able to successfully manage a traditional offering with a large working group. They claim to be able to do this at 30-50% of the cost of a traditional Financial Printer. My suggestion is to query the SEC database for REAL, domestic S-1 registration statements for the provider in question. I’m not talking about micro-offerings, reverse mergers, PIPES or selling shareholder S-1’s. IF you find any, CALL the CFO of the company and ask him or her about their experience, and the ultimate cost. I think you will find this information very valuable. Do you want to trust your capital raise to an unknown quantity? Believe me, there are a lot of things that can go wrong and jeopardize the offering. Stick with an established printer.
7. Actual Cost History
If you really want an idea of the ultimate cost of your IPO, check the SEC database for what are called “Part II” numbers. This section lists certain costs attributable to the Offering, including investment banking fees, legal fees, and financial printing fees. Forget about misleading bids or what an interested party might tell you- see for yourself! This is also a way to compare average fees by each provider.
8. Conference Facilities and Amenities
Some printers are touting the ability to run the Offering “virtually.” In other words, they claim that by not having office space they save money and can pass the savings on to you. The Offering process is characterized by an electronic sharing of information until the final push. At that time it is important for the working group to come together in a neutral, distraction free environment to get the Registration Statement over the goal line. There are a lot of final negotiations, group decisions, etc. that take place at hyper-speed during this time. As one lawyer said to me, “Do you really want your banker sitting in his own office in front of his computer, on two phone lines and blackberry while he’s supposed to be on a conference call with the rest of the Team?” How about your lawyer? Get the group together. It’s important for your group to be in an environment that invites focus while surrounded by the resources that they need to get the job done.
From a political perspective, try getting the underwriters’ lawyers to spend a week in the company counsel’s office. Not gonna happen.
Find your Switzerland- the Financial Printer’s offices that are purpose-built for this type of transaction.
9. Your Representative
Your representative is the one who will be eating, sleeping and breathing the deal. That person is the number one point of contact for any issues or questions. Choose one with the dedication, focus and energy to keep things on the right track. A good printer with a weak representative could be just as unpleasant as the other way around.