Catalyst Roadmap toInitial Public Offering

SMI & SME IPO Handbook

Agenda• Definition of IPO• What & Why IPO• Pro & Con of IPO• Why Global Bridge Management Sdn Bhd is your

preferred active partner in IPO game?

Definition of IPO

What does “going public” or IPO (“InitialPublic Offering”) mean?

• It is the process of offering securities —generally common stock — of aprivately owned company for sale to thegeneral public. The first time thesesecurities are offered is referred to as aninitial public offering, or IPO.

Source: PWC

The Pro of IPO• Increased cash and long-term capital—Funds are

obtained to support growth, increase working capital,invest in plant and equipment, expand research anddevelopment, and retire debt, among other goals.

• Increased market value—The value of public companiestends to be higher than that of comparable privatecompanies due in part to increased liquidity, availableinformation, and a readily ascertainable value.

• Mergers/Acquisitions—These activities may be achievedwith stock consideration and thus conserve cash.

• Growth strategies—Shareholders may achieve improvedliquidity and greater shareholder value. Subject to certainrestrictions and practical market limitations, shareholdersmay, over time, sell their stock in the public market.Alternatively, existing stock may be used as collateral tosecure personal loans.

The Pro of IPO• Ability to attract and keep key personnel—If a

company is publicly owned, employee incentiveand benefit plans are usually established in theform of stock ownership arrangements toattract and keep key personnel. Stock optionplans, for example, may be more attractive toofficers and other key personnel than generoussalary arrangements due to the significantupside potential.

• Increased prestige/reputation—The visibilityfor shareholders and their company is usuallyenhanced. For example, a regional companymay more easily expand nationally following astock offering due to the increased visibility.

The Opposed of IPO• Increased expenses—Many factors play a role in determining the cost of an IPO,

but in all cases the costs of going public are significant. These costs will generallyinclude underwriting fees (generally 5-7 percent of the gross proceeds), feesrelated to legal and accounting advisors, and printing costs. In addition, thereare other fees such as the SEC/SC filing fee, the exchange listing fee (NASDAQ orNYSE or Bursa Malaysia), and any Blue Sky filing fees. Most expenses directlyrelated to the offering in a complete IPO are reflected as an offset to theproceeds received and a reduction of additional paid-in-capital. IPO start-upcosts are therefore not expensed in the statement of operations. However, if theIPO is not completed, such costs are generally expensed.

• Ongoing expenses—Public companies are required to report and certifyfinancial information on a quarterly and annual basis. There will be ongoingexpenses related to these changes such as the expense of independent auditors.Administrative and investor relations costs include those related to quarterlyreports, proxy materials, annual reports, transfer agents, and public relations. Apublic company will now be paying premiums for directors’ and officers’ liabilityinsurance as well. Furthermore, compliance-related costs could also increaseprimarily in relation to the GST certification requirements.

• Loss of control—If more than 50 percent of a company’s shares are sold to just afew outside individuals, the original owners could lose control of the company.If, however, the shares held by the public are widely distributed, managementand the board of directors may maintain effective control, even though theyown less than 50 percent of the shares. Many companies structure theirofferings so that after an initial offering, the founder(s) still has control, andafter subsequent offerings the entire management team maintains control.

The Opposed of IPO• Loss of privacy—The registration statement and subsequent reporting require

disclosure of many facets of a company’s business, operations, and finances that maynever before have been known outside the company. Some sensitive areas ofdisclosure that will be available to competitors, customers, and employees include:1) extensive financial information (e.g., financial position, sales, cost of sales, grossprofit, net income, business segment data, related-party transactions, borrowings,cash flows, major customers, and assessment of internal controls); 2) thecompensation of officers and directors, including cash compensation, stock optionplans, and deferred compensation plans; and 3) the security holdings of officers,directors, and major shareholders (insiders).

• Pressure for performance—In a private company, the business owner/ manager isfree to operate independently. However, once the company becomes publiclyowned, the owner acquires as many partners as the company has shareholders andis accountable to all of them. Shareholders expect steady growth in areas such assales, profits, market share, and product innovation. Thus, in a publicly heldcompany, management is under constant pressure to balance short-term demandsfor growth with strategies that achieve long-term goals. The inability to meetanalysts’ expectations of short-term earnings can dramatically hurt the marketplace’slong-term valuation of a company.

• Restrictions on insider sales—Stock sales by insiders are usually limited. Mostunderwriters require that a company’s existing shareholders enter into contractualagreements to refrain from selling their stock during a specified time following theIPO, typically 180 days. This is called the “lock-up” or moratorium period.

How can Global Bridge Management SdnBhd assist the potential SME and SMI toen route to corporate IPO via specialformulated catalyst solution?

- Pre Listing Process- During Listing Process- Post Listing Process

Beginning early to position your company to go public will save

fee and, most importantly, time. The sooner you are ready to

enter the market, the more flexibility you will have to be

prepared to move on an opportune market and the greater

proceeds and market valuation that favorable market condition

provide. By engaging external advisors earlier in the IPO process,

companies get an objective and professional mechanism for

assessing the state of readiness for life as a public company.

Pre-Listing Process

Preliminary Assessment & Diagnostic for IPO

Preliminary Assessment – 1

Pre-Listing Process

Preliminary Assessment – 2Pre-Listing Process

1. Identify 20 potential well-established SMI & SME companiesto join the “Catalyst Entrepreneur Pathway to Listing”programme; (“CEPAT”) ANNUALLY;

2. Every identified SMI & SME shall be given first priority toapply for minimum funding of RM20 million from variousfinancial institution under various scheme over the period;

3. Every identified SMI & SME shall be assigned one ReportingAccountant for the minimum duration when the programmecommence and until listing;

4. Assist readiness for a public listing, identify potential listingconcerns, review accounting implication on grouprestructuring and suggest necessary actions;

5. Provide strategic advice on capital market alternatives andfund raising possibilities and introduce strategic investors likeprivate equities and venture capital;

Preliminary Assessment – 3Pre-Listing Process

6. Provide a wide range of tax services to achieve greater taxefficiency for the business under the proposed listing andoperation structure, and for the owners;

7. To advice on the regulatory requirements and process for anIPO and develop together with you a viable strategy tohandle the listing process;

8. Review key internal control procedures in relation to financialreporting process and provide recommendations to enhancethe relevant processes.

9. A readiness evaluation can address deal-structuring,including tax planning, and assess:

Corporate structure, Board structure and board subcommittees,Board and senior management capabilities; Corporategovernance arrangements and Stock exchange listing eligibilityissues.

Listing Process

Preparation to en route to corporate floatation

Preparation is the secret to success

While the planning process for an IPO can start the day a

company is incorporated or as late as three months

before a public offering, we recommend that an orderly

plan can be executed over a one to two year period. This

window gives a private company time to think, act, and

perform as a public company.

Kick Start of IPO Strategy – 1

Listing Process

Kick Start of IPO Strategy – 2Listing Process

1. To act as your auditors and carry out periodic audit/reviewand report to shareholders, director and audit committee;

2. To assist your company in identifying and executing mergerand acquisition opportunities;

3. To provide updates on the latest developments and changeson accounting standards, financial reporting, corporategovernance, listing rules and other applicable regulatorymatters;

4. To act as internal control and corporate governanceconsultant and carry out review to provide enhancementcomments;

5. To act as reporting accountant for on-going capital markettransactions, such as issues, major acquisitions and othertransaction.

Kick Start of IPO Strategy – 2Listing Process

6. To assist your company to build an effective and calibermanagement team;

7. To assist to formulate the budgetary control system andperformance measurement such as projection, forecast,investment framework and articulate the variances andremedy for improvement;

8. To advice on the appointment of independent member toyour board of directors;

9. To provide advice how to create and set up an auditcommittee;

10. To assist to evaluate corporate governance principles andpractices;

Kick Start of IPO Strategy – 3Listing Process

11. To assist in building up relationship with an investmentbanking firm, law firm, accounting advisors, and independentauditor;

12. To assist to establish incentive compensation plans;

13. To assist to up to date the audited accounts and resolvepotential disclosure and accounting issues;

14. To assist to draft the “Management Discussion and Analysis”

15. To assist to set up the IPO team called Due Diligence WorkingGroup “DDWG”

Post Listing

Continuous Compliance & Disclosure Strategy

Post IPO Strategy – 1

Post-Listing Process

Post IPO Strategy – 2Post-Listing Process

1. To act as your consultants on ongoing compliance such asListing Requirement, quarterly announcement and AnnualReport presentation;

2. Maintain and create for better investor relationship;

3. Continuous enhancement of corporate governance;

4. Financial and regulatory reporting.

Introduction to Global Bridge Management Sdn Bhd

Why should you appoint us as your IPO consultant

About Global Bridge Management

1. Like any other major strategic undertaking, taking a companypublic requires careful planning to ensure success. Theprocess requires thought around two main facets ofoperating as a public company. First, the company mustprepare its management team and business units to beginacting and functioning as a public company, both internallyand externally, in advance of entering the capital markets.Second, it must identify qualified advisors and key managersto form the going-public team.

2. Accountants play a vital role in advising a company as itnavigates the complex lifecycle of a capital markettransaction, from the identification of an entry strategy to thepublic registration and offering processes and subsequentmanagement of ongoing public company financial reportingobligations. In addition, the post-Sarbanes-Oxley (if overseaslisting) and disclosure-based like Malaysia regulatoryenvironment has raised the bar on the amount of advancepreparation and careful planning necessary to complete asuccessful IPO in the US or Malaysia capital markets.

About Global Bridge Management

3. The risks and consequences of encountering materialweaknesses or a breakdown of internal controls are significant.For these reasons, companies often seek advice and assistancefrom accountants who specialize in such transactions.

4. Global’s IPO Team Services provide experienced advice to acompany as it moves through the life cycle of the IPO processand the post-IPO financial reporting obligations. The firm’sIPO advisors work closely with the company’s managementas they go through the all-consuming process that is the IPO.

5. Management can leverage Global’s extensive experience incapital-raising activities combined with its deep technicalaccounting knowledge and focus on bigger picture issues andthe deal. Your Global engagement team will be chosenspecifically to meet your unique needs and will be supportedby resources that bring the technical, industry, private andpublic company, and IPO transaction expertise required tokeep you ahead of the curve and prepared for potentialissues you could face as a publicly held entity.