I am wondering who actually prepares the IPO prospectus of a company, especially regarding the company strategy, competitive advantage, and potential risk sections...etc. Those are pretty high level and strategic things, and I would expect the information to be accurate only if it comes directly from senior management/CEO ...etc. I want to understand whose words I'm listening to when I read a prospectus. Does it comes from the CEO/senior executives mainly? Or does it comes from some outside editors hired just for the sake of preparing a filing document? Has anyone been involved in preparing an IPO prospectus? Is there a general practice of how it is prepared? Some kind of general process similar to book publishing (ie. manuscript->editing->review->approval ...etc)? My main concern is that I'm afraid I'm reading words from some accountants or business analyst/consultant instead of words from management. Who prepares the prospectus has a significant impact of how I interpret the lines written. Any information is much appreciated. Thanks!
I have worked on a few IPOs. In the deals I have worked on, the law firm for the company is primarily responsible for drafting the prospectus (which is part of a an SEC registration statement) with input from the company's management, the underwriters and underwriters' legal counsel. The law firm for the company may be its regular law firm or a firm specifically chosen for purposes of the IPO.
I should have mentioned that all of the foregoing players participate in "drafting sessions" which essentially are long meetings where everyone goes through the latest version of the prospectus, often line by line, and makes comments, changes, etc.
Yes, the senior management with the assistance of its investment bankers prepare those sections initially. A lot of the text and rationale will come from existing materials which may already be in the public domain. The prospectus is a marketing document primarily and so falls within the remit of the investment banker (rather than lawyers or accountants). The lawyers take over the drafting once the story and numbers are in place. The risk section is meant to be an honest appraisal of what can go wrong specifically (banker writes with management input and lawyer reviews / adds to) and generally (banker/lawyer writes). The lawyers check that the marketing is not over-stepping the mark (e.g. forward looking statements), the accountants state that the numbers are in their opinion fair and correct and the banker makes sure the prosepctus as a whole will do the job - get the shares away, over-subscribed and at the top of the range. It's a real piece of work, probably more demanding than most other publication efforts.
Trust me, the securities attorneys are some of the brightest of the bright. Granted, they may not be the most exciting people in the world as they all sit around and discuss the implications of the latest SEC ruling regarding disclosure of management compensation.
thanks for the info... it is really reassuring to learn that strategic picture comes from management...