Reprinted from:

Designed and published monthly by Bowne & Co., the world’s largest financial printer, and written by the staff of Corporate Finance Institute, Inc. IPO Journal is a joint ven-ture of Bowne Publishing Division and Corporate Finance Institute (Melissa M. Pierkowski, Executive Editor; Graeme K. Howard, Jr., Editor; David C. Glover, Research Editor;James G. Keffer, Research Associate; Carlton J. Hughes, Research Associate; Kristin L. Beane, Research Associate).

Send subscription requests and address changes to Director of Publications, Bowne, 345 Hudson Street, New York, NY 10014; Tel: (212) 229-7233; Fax: (212) 229-3421; Email: pubs@bowne.com. Send editorial questions or comments to Nancy J.F. Short, Editor, Bowne Publishing Division; Tel: (212) 229-7337; Fax: (212) 229-3421; Email: nancy.short@bowne.com or to Graeme K. Howard, Jr., Editor, IPO Journal; Tel: (410) 810-3731; Fax: (410) 810-3734; Email: ghoward@ipojournal.com.

The Bowne catalog is available by calling (800) 370-8402 or on the Internet at http://www.bowne.com. The IPO Journal may not be reproduced, transmitted or stored in wholeor in part in any form without the written consent of Bowne and of the Corporate Finance Institute. ©2002 Corporate Finance Institute. Design and layout ©2002 Bowne. All information is from sources believed to be reliable; however, accuracy cannot be guaranteed. No data or statement herein should be construed to be a recommendationfor the purchase, retention or sale of any security and no information or opinion in this publication constitutes a solicitation or recommendation for the purchase or sale ofany security. This publication is distributed with the understanding that neither the publisher nor Corporate Finance Institute is engaged in rendering legal, accounting orinvestment services. Information contained herein has been provided solely by the staff of Corporate Finance Institute from sources believed to be reliable. No informationcontained herein has been independently verified by Bowne & Co.

Vol.5, No.2 - February 2002; Pages 15 and 16

T R E N D S A N D T E C H N I Q U E S F O R T H E I P O P R O F E S S I O N A L

000000 IPOvl5n2_excerpt 4/12/02 5:21 PM Page 1

15

Stuart Cable of Goodwin Procter25 Questions for IPO Investment Bankers

Stuart Cable, a partner in Goodwin Procter’s Corporate Department, represents awide array of public and private companies involved in diverse businesses, includinglife sciences, optical components, semiconductors, professional services, alternativeenergy, and software. Goodwin Procter is headquartered in Boston, with offices inNew York, New Jersey and Washington, D.C. Cable has served as chair of GoodwinProcter’s Corporate Department (1991-1995), and on the firm’s Executive Committee(1996-1998), and Allocations Committee (1995-2000). Cable’s specific transactionalexperience includes initial and other public offering transactions, representing bothissuers and underwriters; strategic acquisitions; and private placements of equityand debt. Cable has assisted with the IPOs of many companies such as Digitas. Hehas also represented underwriters such as Salomon Smith Barney, U.S. BancorpPiper Jaffray, and First Albany. Cable received his J.D. from Columbia Law School,1979; his M.B.A. from Amos Tuck School of Business Administration at DartmouthCollege, 1976; and his A.B. from Dartmouth College, 1975 magna cum laude.

The new mantra that IPO investment bankers chant when they are considering IPO candidates has three parts: revenue,net income, experienced management. The effect of this trio of requirements is that the quality of IPO companies makingit through the road show has been greatly enhanced, to the benefit of the IPO community.

There is an obverse to the quality coin that is not as apparent. If a quality company wants to go public now, it can beequally demanding in selecting its lead manager(s) and bookrunner(s) as well as its co-managers and syndicate. Whatare the characteristics that the CFO of a high quality IPO candidate can expect in its IPO investment bankers?

Stuart Cable of Goodwin Procter has submitted a series of tough questions for CFOs to address to potential lead managersin an initial public offering. The 25 questions are divided into 4 sections:

• Underwriter selection and economics

• Positioning and valuation

• The IPO process

• Deal structure and pricing

The IPO investment bank that can get an A on this test deserves to be lead manager for the company’s IPO!

Underwriter Selection and Economics1. The Company has preliminarily determined to pursue a three-handed deal. Please indicate your willingness,

and your minimum economics, for serving as (i) lead manager, (ii) co-manager in the middle, and (iii) co-manageron the right. To the extent your willingness to serve as a co-manager or your economic minimum is impactedby our choice of lead manager, please be as specific as possible in your answers.

2. Please provide the Company with a list of all IPOs filed with your bank’s name on the cover in 1999, 2000 and2001 indicating (i) their status (priced, withdrawn or dormant), (ii) if priced, the aftermarket performance relativeto the initial offering price, and (iii) for reference purposes, the name and phone number of the CEO or CFO foreach of the listed filers. Also for each such transaction, please indicate the name of your investment bankersand research analysts working on the transaction.

3. Please describe your institutional sales capability, both U.S. and foreign, with as much specificity as to marketshare and market presence as possible, particularly as that market share may relate to comparable companies.

4. Please describe your retail sales capability, if any, both U.S. and foreign, with as much specificity as to marketshare and market presence as possible, particularly as that market share may relate to comparable companies.

5. Please provide a list of the companies presently followed by your assigned analyst and provide copies of allresearch written by that analyst in 1999, 2000 and 2001.

6. Please describe your programs of investor conferences and identify at which of these conferences youanticipate the Company will be invited to present.

7. Please provide a list of the institutional buyers with whom you expect to arrange “one-on-ones.” As to each,please indicate your success in selling shares to that institution in each of the last five IPOs you have leadmanaged.

8. Can you make a recommendation between fixed percentage and “jump ball” underwriting economics. Also,please indicate your willingness to participate as co-manager in either case, and your minimum economics ineither case. On this last point, please be advised that the Company does not contemplate a negotiation ofthese economics subsequent to underwriter selection. If for example you indicate a willingness to co-manage

(…page 16)

000000 IPOvl5n2_excerpt 4/12/02 5:21 PM Page 2

16

in the middle, but set an economic minimum that does not fit the company’s agreed upon economics with theCompany’s lead manager or other co-manager, you will not be selected and you will not have a second biteof the proverbial apple.

9. Please describe with specificity the follow-on offerings you have done for the companies whose IPOs youhave underwritten. In that regard, please provide data as to timing, pricing, size, and primary vs. secondaryfor the follow-on.

10. In the current environment would you recommend a retail component? If you do not provide that capabilityand you think it is important, which investment bank would you recommend?

11. If hypothetically your firm was not selected as lead manager, if you were a Director of the Company, whichinvestment bank would you select and why?

Positioning and Valuation12. Please list the companies to whom you believe the Company will most frequently be compared in the aftermarket.

Please specify which of those comparable companies you believe we should most like to be compared toand describe how you would position the Company to achieve that objective.

13. Please delineate your pre-money valuation for the Company with specific references to the comparables listedin answer to the prior question.

14. Please write a two or three sentence paragraph for the lead paragraph in the prospectus summary which,based on your admittedly limited knowledge of the Company, best positions the company for its IPO.

The IPO Process15. If selected as lead manager, what law firm do you anticipate selecting as underwriters’ counsel?

16. Assuming audited year-end financials will be available on ______________ and that the Company wishes tomove as expeditiously as possible, what timetable would you propose?

17. Please provide a list of the cities you would schedule on the road show. With regard to the European component,please provide a list of the institutions with whom you expect to arrange one-on-ones.

18. The Company presently has one independent Director, and will shortly begin interviewing for the second and thirdslots. Is it critical that all three independent Directors be on board by filing? Do you have any thoughts as to whatbackground for an additional Director would best facilitate the marketing effort?

19. The Company contemplates once a week drafting sessions in ___________ beginning in ___________. Can youaccommodate that schedule and which members of your team will be attending the weekly drafting sessions?

20. Please describe with specificity your philosophy behind the “friends and family” program and identify who in yourorganization might administer such a program?

21. Please describe with specificity your philosophy behind the green shoe and, in particular, your willingness toallow the Company’s private equity investor(s) and/or the founder/CEO to participate in the shoe or possibly theoffering itself.

22. Please describe the timing and process of your commitment committee in connection with the approval of theIPO. Does any member of the proposed team sit on the committee?

Deal Structure and Pricing23. Please describe with specificity your initial thinking as to deal size.

24. Please describe with specific examples, if possible, situations in which you have granted post-closing waivers ofthe lock-up.

25. Assuming you are selected as lead manager, please describe with specificity your philosophy regarding pricingand share allocation. Please provide data for 1999-2001 for the IPOs you have lead managed relating to shareturnover and flipping.

[Now that’s a script for an IPO investment banking beauty contest!]

(“Stuart Cable of Goodwin Procter” Continued from page 15)

Comments to mpierkowski@ipojournal.com and ghoward@ipojournal.com

000000 IPOvl5n2_excerpt 4/12/02 5:21 PM Page 3

Designed and published monthly by Bowne & Co., the world’s largest financial printer, and written by the staff of Corporate Finance Institute, Inc. IPO Journal is a joint ven-ture of Bowne Publishing Division and Corporate Finance Institute (Melissa M. Pierkowski, Executive Editor; Graeme K. Howard, Jr., Editor; David C. Glover, Research Editor;James G. Keffer, Research Associate; Carlton J. Hughes, Research Associate; Kristin L. Beane, Research Associate).

Send subscription requests and address changes to Director of Publications, Bowne, 345 Hudson Street, New York, NY 10014; Tel: (212) 229-7233; Fax: (212) 229-3421; Email: pubs@bowne.com. Send editorial questions or comments to Nancy J.F. Short, Editor, Bowne Publishing Division; Tel: (212) 229-7337; Fax: (212) 229-3421; Email: nancy.short@bowne.com or to Graeme K. Howard, Jr., Editor, IPO Journal; Tel: (410) 810-3731; Fax: (410) 810-3734; Email: ghoward@ipojournal.com.

The Bowne catalog is available by calling (800) 370-8402 or on the Internet at http://www.bowne.com. The IPO Journal may not be reproduced, transmitted or stored in wholeor in part in any form without the written consent of Bowne and of the Corporate Finance Institute. ©2002 Corporate Finance Institute. Design and layout ©2002 Bowne. All information is from sources believed to be reliable; however, accuracy cannot be guaranteed. No data or statement herein should be construed to be a recommendationfor the purchase, retention or sale of any security and no information or opinion in this publication constitutes a solicitation or recommendation for the purchase or sale ofany security. This publication is distributed with the understanding that neither the publisher nor Corporate Finance Institute is engaged in rendering legal, accounting orinvestment services. Information contained herein has been provided solely by the staff of Corporate Finance Institute from sources believed to be reliable. No informationcontained herein has been independently verified by Bowne & Co.

000000 IPOvl5n2_excerpt 4/12/02 5:21 PM Page 4