Note 17 - Series 75 PDF

Preview

Summary

Series 75...

Description

Selected dealer agreement - Terms for the selling group. Include: -Affirmation that the firm is in good standing with its regulators -Agreement by the selected dealer to follow all applicable SEC regulations in the distribution -Methods of communicating supplemental information about the offering -Payment terms for the selected dealer's participation -Circumstances under which the deal will terminate

Selling group - Comprised of broker-dealers that sell an allotment of newly issued securities on behalf of an underwriter or syndicate members

Sensitivity Analysis - Core DCF valuation drivers, such as WACC, exit multiple or perpetuity growth rate, sales growth rates, and margins, are the most commonly sensitized options

Sensitivity analysis usually sensitizes... - Exit multiple and WACC

Setting Deal Terms: Underwriting agreement - AKA the purchase agreement

Written contract between the issuer and the investment banking firms in the syndicate.

Settlement - -Legal title passes from seller to buyer and the stock trade is complete -Settlement of stock trade must occur three business days after the trade date (T+3)

Shareholders' equity - Amount by which a company's assets exceed its liabilities

Shelf registration - Allows the issuer to make an offer of securities on a delayed or continuous basis, at various times and prices

Sinking fund redemption - Issuer regularly sets aside money for the redemption of the bonds before maturity --> Ensures that the issuer has the necessary funds to meet required redemptions

Size premium - Smaller companies' risk is not entirely captured in their betas given limited trading volumes of their stock, making covariance calculations inexact

Small Business Administration (SBA) - Facilitates programs that help start-up business access financing through banks

Smaller reporting companies - -Subject to scaled reporting requirements -$75 million or less -Some of the scaled reporting requirements include -Risk factors --> Not required to disclose risk factors -Financial Statements --> 10Qs must contain two years of audited balance sheet data -File 10-K within 90 days of year end -File 10-Q within 45 days of fiscal quarter end -File 8-k within 4 business days of event

Some private limited partnerships may only be offered to - accredited investors

Special situation investing - -Large public company spinning off -Tender offer -A bankruptcy proceeding -A large lawsuit

Spinning - -Illegal -Underwriter allocates shares in exchange for future investment banking business

Split offering - A combination of a primary and secondary offering

Shareholders may choose to sell shares alongside a company in a registered offering

Sponsored ADRs - Carry all rights of common stock, including voting rights

-Issued in conjunction with foreign company, whose stock will underlie them

-Individual share of a foreign corporation represented by an ADR is called American depository shares

Spot prices vs. future prices - Spot prices= current prices Forward prices= traded today but delivered in the future

Spread is divided into three components - -Manager's fee (10-20% of spread)-Compensates the managing underwriters for negotiating and managing the offer -Underwriting fee (20-30%)-Compensates syndicate members for assuming the risk of not being able to sell the shares -Selling concession (50-60%)- Compensates the managing underwriter, the syndicate member, or the selling group member for actually selling the shares

Spreads on equity IPOs tend to cluster around - 7%

Stapled financing package - "Pre-packaged" financing structure in support of the target being sold

Sell-side bank consults with financing team to determine fair structure and leverage capacity --> typically conveyed verbally to the buyers

Statement of Comprehensive Income - Expanded income stats

Reconciles the P&L to account for investments made by, and distributions made to, owners of the company

Stock Appreciation Rights (SAR) - Management or other employees receive a bonus if the company performs well financially

Employees receive a cash payment based on their increase in value of a stated number of shares over a specific time period

Cash payouts are made without buying or selling of security

STRIPS - Separate Trading of Registered Interest and Principal Securities --> allows investors to purchase individual interest and principal components of certain Treasury notes and bonds as separate securities, called STRIPS --> Effectively zero-coupon bonds issued by the US government

For example, a 10-year treasury note could be stripped into 21 STRIPS, resulting in a new security for each of the 20 interest payments and one security for the principal payment --> Structured by banks, not govts ----> No reinvestment risk

Subchapter C corporation (C Corp) - State-chartered business with its own legal entity apart from that of its owners or managers

C Corps can extend beyond the careers or lifetimes of its owners and is assumed to exist in perpetuity

C Corps are owned by shareholders

Raise capital through sale of stock and bonds

income double taxed --> At Corporate level --> At Dividend level

Subchapter S corporations - Same as C corps except:

-Tax election that enables them to to avoid having their income double taxed --> Taxes are passed directly to shareholders

-Unable to be listed on stock exchanges or have their symbol be publicly traded

Suitability rules - Made to individuals or institutional investors

Syndicate - Group of firms working together in the process of offering and distributing newly issued securities

Syndicate desk - is tasked with marketing, selling, and possibly, stabilizing the news issue

Takedown price - Syndicate members purchase the securities from the managing underwriter at the takedown price

Tangible book value - Shareholdes' Equity - Goodwill

Target description and financial data - Target 10-K/Q 8-K Proxy Registration Statement/Prospectus (S-4,424b) 13E-3

Target historical share price data - Financial Information Service

Targeted auction - When only a select group of potential buyers are approached...