CEOs Remain Optimistic About a Return of the IPO Market

Attendees at Ernst & Young's 7th Annual IPO-CEO Retreat Recognize That Going Public is a Milestone of Success on the Path of a Quality Company

LAGUNA NIGUEL, Calif., May 12—Going public is still an important strategic transaction of a viable business, according to attendees and CEOs of public companies at Ernst & Young's 7th annual IPO Transformation® ~ CEO Retreat. Two-thirds of senior executives polled in an on-site survey rate the current IPO climate "difficult but not impossible" and say they have adjusted their plans to take their companies public, citing the need to be fully prepared to meet new regulations.

The conference, co-hosted by Wilson Sonsini Goodrich & Rosati, brought together senior executives from 50 emerging growth companies in North America. Attendees from a range of industries—including life sciences, retail, technology, consumer products and manufacturing—gained insight from CEOs of public companies, accountants, attorneys, investment bankers and other professionals on a range of topics relevant to planning for the IPO process.

"Companies recognize the benefits of going public and still hold it to be a major milestone in their maturation," says Daniel Love, Americas Director for Emerging and Growth Markets at Ernst & Young. "We heard attendees and speakers alike state that an IPO is a graduation of sorts that enhances the visibility and credibility of a company in the eyes of employees, customers and stakeholders."

Several sessions at the conference focused on the importance of complying with new regulations imposed by Sarbanes-Oxley and the SEC. Speakers from Ernst & Young, Wilson Sonsini Goodrich & Rosati, Goldman, Sachs & Co., NASDAQ, and CEOs of public companies emphasized the need to prepare rigorously and act like a public company long before the IPO process, including imposing strict internal controls, a strong board of directors, and an emphasis on quality throughout the organization.

The uncertainty surrounding the application of the new corporate governance regulations was a major concern for nearly 70% of the attendees. When asked how they plan to meet this challenge, 54% responded that they would "invest in additional people and technology for compliance," and 37% said they would "strengthen their company's proposed board of directors."

Current CEOs of public companies stressed, however, that even the responsibility of complying with new regulations should not fundamentally alter the strategic direction of their business, if it is advancing towards an IPO. David Eslick, Chairman, President and CEO of USI Holdings Corporation, which completed a successful IPO in October 2002, said, "The CEO of a solid, viable business will not intimidated by the IPO process if that is the path to support the ultimate goal of the company." Attendees mirrored this sentiment while being more cautious, perhaps, about the time frame, with 28% citing the second half of 2004 as a goal, and 41% of respondents anticipating going public later than 2004.

The conference addressed other important factors in the IPO process, including board responsibilities and recruitment, officer certification, stock exchange reforms, internal and disclosure controls, stock options and the possibilities for merger and acquisitions.

The IPO Transformation ~ CEO Retreat was created by Ernst & Young in 1997 and is co-hosted this year by Wilson Sonsini Goodrich & Rosati. Sponsors include Bowne & Co., Goldman, Sachs & Co., Fleishman-Hillard and Silicon Valley Bank.

About Emerging and Growth Markets Practice
Ernst & Young's Emerging and Growth Markets practice is dedicated to understanding and serving the needs of entrepreneurial high-growth businesses. This practice has grown alongside the hundreds of companies it has assisted from start-up to maturity, and investment to exit. With over 30 years of experience advising growth companies, Ernst & Young focuses on means that help accelerate and manage the development of business, including effective execution of transactions, operational infrastructure, financing needs and dynamic business strategies. One of the initiatives in the Emerging and Growth Markets practice is the Venture Capital Advisory Group (VCAG), a global team of professionals who can marshal global resources to serve venture capital funds, their partners and portfolio companies.

About Ernst & Young
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