One of the many decisions confronting a private company management when they begin contemplating accessing the public markets is how to write the S-1 document. The scope, complexity and legal requirements of the S-1 can make this process feel very daunting, particularly for managements who are undergoing it for the first time. And, while there are many outside advisors available to help with portions of the document, the primary responsibility of producing the initial draft of the S-1 will always fall on senior management. More and more companies are hiring ghostwriters to write the initial management draft of the S-1. Over the past year, Gilmartin Group has begun managing the S-1 drafting process for an increasing number of clients; this service has become one of our core competencies. As the number of clients we have worked with on S-1s has grown, we have observed a number of ways that ghostwriting benefits managements.
They Optimize Management’s Time
Writing an S-1 is a painstaking and time-consuming process, as the document must help create investor interest while also standing up to legal and regulatory scrutiny. Using an experienced outside writer will optimize management’s time during the document’s creation, review, and edit periods, resulting in a higher quality document in a shorter period of time. Before the writer drafts the documents, management should share what information must be included and who from management will provide and validate it. This allows senior management to continue devoting the majority of their time to their “day jobs” (aka running the business) and only involve themselves in the drafting process on an as-needed basis. The review process is also streamlined for management due to the fact that editing an existing draft is a far less burdensome process that creating one from scratch. It also allows individuals to edit sections of the document that fall under their areas of expertise while maintaining strict “version control.” This is a very necessary and elusive aspect of creating an S-1. We have found that our involvement allows for many more revisions, or “turns”, of the document in a short period, greatly enhancing its quality. This time management benefit is extremely popular with our clients.
They Are Natural Liaisons with Legal and Financial Advisors
After creating an internal draft of the S-1, the management passes the draft to the lead underwriters and legal team, typically at the org meeting. Then the bank-led drafting sessions begin. During this roughly month-long process, the document is scrutinized and edited to the satisfaction of all parties prior to submission to the SEC for comment. An outside writer can play a valuable role at this stage. He or she can act as management’s interface with the other advisors while ensuring that management’s vision of the document, and all subsequent marketing efforts around the financing, is preserved to the greatest degree possible during the legal review.
Another benefit that we have observed from participating in this process is bringing the bank’s lead drafter up to speed much more rapidly, as we are able to advise him or her on the work that has gone into the document and provide insights that may not be obvious upon initial review. It is also important to note that due to the high volume of S-1s being created, the investment banks are experiencing capacity constraints in terms of their ability to create documents simultaneously, and our mutual clients have welcomed any ability to expedite this process.
They Become Experts Who Don’t Go Away After the IPO
From a holistic perspective, hiring an outside S-1 writer, particularly if it is part of a broader IR relationship, creates the opportunity for the external consultant to immerse themselves deeply in the overall corporate culture in a very short period of time. The knowledge and relationships gained during this intense period create a skill factor that has long-lasting corporate benefits pertaining to the overall IPO process and beyond. All subsequent corporate messaging and connectivity with Wall St. will now be entrusted to someone who has truly become an expert in the opportunities, challenges and competition that the company will face. This distinct advantage becomes even more apparent in the post-IPO period when interaction with the banks decreases measurably. The inherent structure of the relationship between IR consultant and senior management is intended to last longer than that with banks and therefore becomes a very natural fit to fill the gap post-IPO as the bank moves on to other deals.
Gilmartin Can Be Your Ghostwriter
Gilmartin Group is providing S-1 writing as a service to a growing number of our clients, and we are very excited about offering it more broadly. It is a unique skill that is hard to find and allows us to provide our clients with a valuable service and form the basis of a long-term relationship. Contact us today to learn more.
Matt Lane, Managing Director