HOW TO MAKE THE IPO PROCESS WORK Adam Fenner, Partner

OLSWANG Leading business law firm, headquartered in London 4 European offices 25 affiliate offices in USA More than 50 LSE / AIM quoted clients 2006 / 2007: 120 deals > $30 billion Dedicated Israel team: technology, media, telecoms, healthcare, real estate

Agenda 1Timetable 210 key IPO challenge areas 3Opportunities in challenging markets

IPO Process and Timetable

10 Key IPO Challenge Areas “ Quoted Companies Alliance” Corporate Governance Guidelines: “London IPOs – A Practical Guide for International Companies” International Working Group Market professionals Non-executive directors Exchange representatives Best practice: IPO process and post IPO : 30 guidance principles

10 Key IPO Challenge Areas LENGTHEN CANCEL UNDERMINE X X X

ASSIST PROTECT ENHANCE 10 Key IPO Challenge Areas   

10 Key IPO Challenge Areas IPO Process Timing Resource, due diligence and documentation * Marketing the IPO * Dialogue with advisers * Board structure * Capital structure *

Resource, Due Diligence and Documentation Management Resource : Decision taking Valuation Reorganisation Negotiations Documentation High quality team Quality documents Advance Preparation/ Homework

Dialogue with Advisers Open, co-operative, responsive Consensus Anticipate Material contracts Debt arrangements Negotiations

Capital Structure Keep it simple One class Anti-dilution protection 10% limit on options No option discounts on IPO Special/veto rights = red flag to new investors Takeover tag along

Board Structure Effective, committed, experienced management team with CEO and CFO Combined Code on Corporate Governance/QCA corporate governance guidelines Two independent non-executive directors Early appointment Terms for executives’ employment contracts notice periods options “Without an effective board, the best business will remain unfunded by sophisticated investors”

10 Key IPO Challenge Areas Post IPO Corporate governance and the role of and relationship with non-executive directors * Continuing obligations and dialogue with advisers * Managing market expectations/communicating with the market * Role of CFO *

Corporate Governance and Non-Executive Directors Good corporate governance practices are key Combined Code/QCA guidance Not merely box ticking Independent non-executive directors Audit, nomination and remuneration committees Attend all board meetings Access to board papers Annual refresh session

Continuing Obligations and Dialogue with Advisers Notify market of price sensitive information: Financial condition Sphere of activity Business expectation of its performance Don’t sit on bad (or good!) news Primary point of contact with advisers to discuss all proposals and developments Other continuing obligations including dealing restrictions and substantial transactions

Managing Market Expectations Prospectus Research note – discuss post IPO coverage with broker “Under promise, over deliver” Commit to strategy Develop annual programme of market contact - six monthly reporting calendar and AGM

Role of CFO Long form/short form reports Financial model Project manager in the company Detailed knowledge of income streams Test projections and assumptions from a business perspective

Opportunities in Challenging Markets

Opportunities in Challenging Markets

Opportunities in Challenging Markets Low valuations = opportunities for cash buyers and strategic acquisitions M&A roll ups Takeovers / Take-Privates Reverse Mergers

Opportunities in Challenging Markets M&A no shareholder consent on AIM no new prospectus paper acquisitions Takeovers / Take-Privates City Code on Takeovers and Mergers 6 General Principles 38 Rules 29.9% maximum control stake otherwise mandatory offer (Rule 9) Regulated offer timetable: 65 to 120 days

Opportunities in Challenging Markets Takeovers / Take-Privates (cont.) General Principles Equivalent treatment for target shareholders Shareholders must have sufficient time to consider bid Target directors must act fairly False markets / artificial distortion Only announce when financing is in place Target must not be distracted beyond prescribed timetable

Opportunities in Challenging Markets Reverse Mergers Acquiring control of a publicly traded company City Code on Takeovers and Mergers – exemption from Rule 9 New prospectus / admission document required Access to existing shareholder base Access to cash resources with no fundraising

Wrap Up 1Timetable 210 key IPO challenges areas 3Opportunities in tricky markets

Thank you for your attention For more information please contact: Adam Fenner +44 (0) [ ]