Changes to the IPO Process
Part 1 of the Impact of the JOBS Act on Private Equity
Podcast Series

July 2, 2012

JOBS Act Podcast Series§ The Jumpstart Our Business Startups Act (or “JOBSAct”) became law on April 5, 2012
§ Intended to make it easier for businesses to raise
capital, the JOBS Act may have meaningful benefits
for private equity firms and their portfoliocompanies§ This presentation is part of our Impact of the JOBS Acton Private Equity Podcast Series, focusing on thepractical implications for private equity firms andtheir portfolio companiesØPart 1: Changes to the IPO Process§ Part 2: The JOBS Act for Portfolio Companies§ Next…

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Presenters
Joshua Ford Bonnie

Contact Information:(212) 455-3986
jbonnie@stblaw.com

Joshua Ford Bonnie is a partner in Simpson Thacher's Corporate Department. Mr. Bonnie has advised
a significant number of companies on their initial public offerings, including: The Carlyle Group L.P.
(2012); Regional Management Corp. (2012); FXCM Inc. (2010); DynaVox Inc. (2010); The BlackstoneGroup L.P. (2007); MasterCard Incorporated (2006); Evercore Partners Inc. (2006); Alpha NaturalResources, Inc. (2005); Cohen & Steers, Inc. (2004); and Accenture Ltd (2001). The initial public offerings
of Blackstone, MasterCard and Accenture were the largest U.S. IPOs of 2007, 2006 and 2001,
respectively. Mr. Bonnie has also advised Blackstone and The Carlyle Group on a number of strategictransactions, including Blackstone’s sale of $3 billion of non-voting common units to a sovereign
wealth fund established by the People’s Republic of China and the 2007 and 2010 investments in The
Carlyle Group by Mubadala Development Company, the Abu Dhabi-based strategic development andinvestment company.

Joseph H. Kaufman

Contact Information:(212) 455-2948
jkaufman@stblaw.com
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Joseph Kaufman is a member of the Simpson Thacher’s Corporate Department. Mr. Kaufman advises
clients on public and private offerings of debt and equity securities, corporate governance, businesscombinations and general corporate and securities law matters. Mr. Kaufman advised HCA Holdings
Inc. in its March 2011 $4.35 billion initial public offering, the largest private-equity backed IPO ever inthe United States. He also advised Nielsen Holdings N.V. in its January 2011 $1.89 billion initial publicoffering, as well as each of Dollar General Corporation, Virgin Mobile USA, Inc., Sealy Corporation
and PanAmSat Holding Corporation in connection with their respective initial public offerings. He
also advised Kohlberg Kravis Roberts & Co. in connection with its business combination with KKR
Private Equity Investors L.P., resulting in KKR being listed publicly on the New York Stock Exchange.

Who Can Use the New IPO
Provisions?
Emerging Growth Company (“EGC”)§ An issuer that had total annual grossrevenues of less than $1 billion during its
most recently completed fiscal year
§ A company is not an EGC if any of its commonequity securities were first sold in a registeredoffering on or before December 8, 20114

Who Can Use the New IPO
Provisions?
Emerging Growth Company (“EGC”)§ EGC status continues until the earliest of:§ the date on which such issuer has, during theprevious three years, issued more than $1
billion in non-convertible debt securities§ the date on which such issuer becomes a “largeaccelerated filer” (i.e., a seasoned issuer with$700 million or more of public float)§ last day of fiscal year in which revenues exceed$1 billion§ last day of fiscal year following the fifth
anniversary of the IPO
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Confidential SEC Staff Review§ An EGC is entitled to confidential review of theregistration statement for its IPO§ Confidentially-filed initial submission and any
amendments must be publicly filed at least 21 days
before commencement of roadshow§ Confidential review is also available for otherpre-IPO registration statements of an EGC, suchas an S-4 for a debt exchange offer§ Confidentially-filed initial submission and any
amendments must be publicly filed at least 21 daysbefore request for effectiveness§ SEC correspondence relating to staff comments
will still eventually become public6

Testing the Waters§ An EGC is permitted to make oral and written
communications with certain institutional
investors before or after filing registration
statement to determine whether suchinvestors might have an interest in acontemplated securities offering§ Previously, “gun jumping” and “quiet period”
rules prohibited communications prior to theinitial filing and imposed restrictions on writtenmaterials between initial filing and effectiveness§ Market practice continues to develop§ SEC staff may request copies of testing thewaters communications
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Reduced Disclosure§ EGCs benefit from reduced disclosure
requirements in the IPO and for up to fiveyears thereafter§ Reduced requirements relate to:§ Financial information and accounting§ Executive compensation

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Reduced Disclosure:
Financial Information§ Fewer years of historical financial
information required in IPO registration
statement§ Two years of audited financial statements(rather than three)§ Two years of associated MD&A (rather thanthree)§ Two years of selected financial data (ratherthan five)§ No more than two years of acquired businessfinancial statements (rather than up to three)9Reduced Disclosure:
Financial Information
Audit and Accounting Rules§ Auditors of EGC not required to attest to its
internal controls under Sarbanes-Oxley
404(b)§ EGCs exempt from selected audit rules that
may be issued by the Public Company
Accounting Oversight Board§ For any future new or revised accounting
standards, EGC can rely on any longer
implementation timetables applicable forprivate companies

10Reduced Disclosure:
Executive Compensation§ Generally only required to disclosecompensation of three executive officers(including the principal executive officer) rather
than five (including the principal executive andfinancial officers)§ Not required to present Compensation
Discussion and Analysis (CD&A)§ Also not required to present Grants of PlanBased Awards Table, Options Exercises andStock Vested Table, Nonqualified Deferred
Compensation Table, Pension Benefits Table

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Disclosure of EGC Status§ We expect that an EGC will disclose its EGC
status and its implications in its IPO
prospectus as well as periodic reports:§ EGC status to be indicated on the cover page of
the IPO prospectus§ Risk factor relating to consequences of EGCstatus§ Possible disclosure in the Management’s
Discussion & Analysis§ SEC may require additional EGC-specificdisclosures12

Changes for Research Analysts
Covering EGCs
§ Reduced restrictions on research reports
and the role of securities analysts§ Eases restrictions on publication of research
reports by underwriting firms prior to IPO
and during post-IPO periods§ Permits research analysts to participate withinvestment bankers in management meetings§ Extent of practical effect remains uncertain:§Other restrictions still apply, including under anearlier legal settlement with leading
underwriting firms§Underwriters may hesitate to publish dealrelated research given potential liability
concerns
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JOBS Act Podcast Series§ This presentation has been part of our Impact of theJOBS Act on Private Equity Podcast Series, focusing on
the practical implications for private equity firms andtheir portfolio companies§ Part 1: Changes to the IPO ProcessØPart 2: The JOBS Act for Portfolio Companies§ Next…

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