EnergyBiz - November/December 2007 - (Page 34)

The document analysts and potential investors look at first is the S-1, or “red herring,” an SEC filing virtually all companies going public need to file. The S-1, which can easily run to hundreds of pages, details virtually everything about the company, including its history, management, plans, capitalization and balance sheet. It includes a discussion of the company’s business and detailed financial information as well as all potential risks the business faces. “Getting the S-1 perfect is unbelievably time-consuming and energy draining,” says Comverge’s Robert Chiste. “It’s a very, very precise business that involves incredible scrutiny by your legal and accounting team.” Companies going public don’t typically have the expertise in-house to complete the S-1. Rather, they rely on their venture capitalists and, especially, their investment banks to provide it. Interestingly, both companies were able to attract bulge bracket banks, Citi for Comverge, Credit Suisse for EnerNOC, to pilot them through the IPO process. Generally bulge bracket banks, the largest investment banks, don’t bother with offerings of less than $200 million. Their interest in offerings in the $100 million range is a testament to what they thought would be the ultimate market value of these companies and their near- and longer-term potential. The investment bank is also crucial in arranging the road show, the hectic two- or three-week period just prior to the offering date during which the chairman or other principals meet with prospective institutional investors. Robert Chiste calls the road show “the most exhilarating and most exhausting thing that any human can go through.” Citi was extremely helpful in the process, according to Chiste. The bankers structured the entire process. “We’d fly in and three Citi sales people would be there to meet us and hold our hands. They’d meet with investors and educate them on exactly what we’re about and they’d meet with us to educate us about each investor.” Chiste warns against underestimating the importance of the bank’s role in the process. “Most CEOs who go through the IPO process do it once or twice in their careers. These bankers have done it hundreds of times; don’t let your CEO ego get in the way of taking their advice.” Citi, for example, urged Chiste to get a road-show coach early on in the process; he resisted until the last minute, assuming his broad experience speaking to the investment community was all he needed. “We ended up getting this great coach very late in the game, and it was one of the best things we did. He covered everything — how to get the message out in 25 minutes, how to do the PowerPoint, even where to stand. When we put it all together, our road-show was flawless, and it wouldn’t have been if not for that coach. Bottom-line advice: listen to your bankers, even if you think you know what you’re doing.” Both companies ran extremely successful road shows and ended the process well oversubscribed, and in both cases, the stocks surged post offering, despite the fact that they were priced at the upper ends of their ranges. The Facts datE of iPo tickEr syMBol initial offEring PricE PEr sHarE total raisEd tHrougH iPo valuE of sHarE as of oct. 12, 2007 Est. rEvEnuEs in 2007 Est. Profits [lossEs] in 2007 rEvEnuEs in 2006 Profits [lossEs] in 2006 nuMBEr of EMPloyEEs HEadquartErEd robert M. chiste, who took over as chairman, president and ceO of comverge in 2001 PhOTO cOurTesy OF cOMverGe Tim healy, co-founder with david brewster of enernOc PhOTO cOurTesy OF enernOc EnerNOC May 18, 2007 Enoc $26 $98 Million $48.07 $53.4 Million ($1.43/sHarE) $26.1 Million ($1.60/sHarE) 131 Boston Comverge and EnerNOC used the proceeds from their IPOs for expansion. “We’ve used the funds for scaling,” says Neal Isaacson, EnerNOC’s CfO, “growing everything from our direct sales force to our regulatory affairs and market-development to our operations and engineering resources.” The stock also provides currency for acquisitions. In July, for instance, Comverge significantly increased its megawatts under contract and entered the commercial and industrial sector through its acquisition of Enerwise Global Technologies. EnerNOC’s September acquisition of MDEnergy broadens its offerings to include energy procurement services in deregulated markets as well as immediate access to MDEnergy’s 400 institutional, commercial and industrial customers, including many national accounts. Brewster, EnerNOC’s president, counts some of the intangible advantages of being a public company as among the most valuable. “It’s contributed significantly to our brand recognition and it’s given us an important edge in recruiting the best employees, getting the best and the brightest in to develop software and technology and to boost our operations and sales teams.” Neither CEO believes that going public has changed their companies’ cultures, but it’s still too soon to really know, and it’s unlikely that such a major change could be without any cultural consequences. Chiste insists that Comverge is still an entrepreneurial company, but he admits that it has to play by more rules and regulations and is open to much more scrutiny than when the company was private. And now that employees at both companies are shareholders, there has to be at least a subliminal awareness of the daily movements in the stock price. Still, he and Healy believe they’re running their compaComverge nies pretty much the way they had before the aPril 12, 2007 IPOs, with an eye toward growth rather than coMv short-term revenues. And while neither company $18 has achieved profitability, growth has continued $95 Million to ramp up. But so have the expectations for $35.50 growth. “You suddenly have expectations to $58.3 Million deliver on that are even greater than when you ($0.10/sHarE) $33.8 Million were a private company,” says Nth Power’s Tim ($0.52/sHarE Pro forMa) Woodward. How well both stocks fair longer term 117 will depend largely on how successfully they fulfill atlanta/East HanovEr, n.J. those expectations, quarter to quarter. 34 E n E rgyB i z November/December 2007

Table of Contents Feed for the Digital Edition of EnergyBiz - November/December 2007

EnergyBiz - November/December 2007 Contents Continental Grid Vision Needed Readers’ Views and Opinions Next for National Grid Clearing the Air The Need for Nuclear Energy Trade Status Report The Innovators California On The Leading Edge FERC Sparks Change Getting Coal Right Leadership in Times of Turmoil Innovation Delivers Return A Tale of Two IPOs LNGs Bright Prospects Generation Techologies The Age of Superconductors Leaders with Vision Get Ready for Plug-in Hybrids Betting on Batteries Cost of Decarbonizing Nuclear Helmsman – A chat with Dale Klein, Chairman of the U.S. Nuclear Regulatory Commission Global Energy Snapshot; Low-Income Energy Help; IT Spending Robust; The Greening of State Regulators; Generating Support Simplifying Offshore Wind Regs Chasing Construction Costs Energy Agency Sets New Course Deregulation Means Higher Rates Go-To Staffer Nightmare in Manhatten

EnergyBiz - November/December 2007

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