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Need a reminder of how rare initial public offerings have become? Consider Wilson Sonsini Goodrich & Rosati’s recent work on behalf of Netgear Inc. The $112 million July IPO was just the second this year for Wilson Sonsini. And considering the generally crummy marketplace, that figure may actually give Wilson Sonsini some cause to brag. Just 25 companies have gone public so far this year, and only nine of those have been California-based. It’s quite a slide from the go-go days of the technology boom. In fact, in 1999, when dot-coms were the darlings of Wall Street, Wilson Sonsini alone handled 117 IPOs for issuers and underwriters, making it the nation’s most active IPO practice. That year, more than 170 Bay Area companies went public, according to data from Thomson Financial Securities Data. Despite the potential for depression as they consider how far the market has declined, Silicon Valley securities lawyers are actually feeling sort of sunny about the IPO scene. They say recent deals — like the one for Netgear — may encourage other companies to take the plunge. Though the poor economy and implementation of the Sarbanes-Oxley Act may dampen deal flow, several offerings are in the pipeline. “I see a chance for companies to go public, which is a change from the last 12 months,” said Latham & Watkins partner Patrick Pohlen, who represented underwriter Lehman Brothers in the Netgear deal. And the IPOs that have gone out have “all done reasonably well in the aftermarket.” Still, don’t expect any sprint to market to begin immediately. Latham partner Alan Mendelson said Sarbanes-Oxley, which imposed a sweeping set of corporate governance reforms, might slow the deal flow. “One reason there is not a rush out the door is that there is an education process” for companies going public, Mendelson said. “You have to do more prep work with lawyers and accountants than you would in previous years.” Because of Sarbanes, some companies “may look to do other liquidity events than an IPO,” he said. Latham has several clients that are planning to file IPOs — one in August, another in November or December, and a third early next year. Pohlen said he is also working on two underwriter deals that are to start in September. And Palo Alto partner John Sheridan said Wilson Sonsini also has several clients that are actively considering a public offering. “The demand [among investors] is out there,” Mendelson said. “If whetted properly, this recovery will be gradual but strong.” So far in 2003, the few deals involving California companies have been spread among a range of players. The deals have been spread out primarily among local firms. For example, Wilson Sonsini represented InterVideo Inc. while O’Melveny & Myers was counsel for the underwriter in the deal. Fenwick & West snagged an IPO for FormFactor Inc., and Gray Cary Ware & Freidenrich served as the underwriter’s counsel in the deal. Cooley Godward represented iPass Inc. while Shearman & Sterling counseled the underwriter. In an offering for Digital Theater Systems Inc., Heller Ehrman White & McAuliffe represented DTS, and Skadden, Arps, Slate, Meagher & Flom handled duties for the underwriter. “Traditionally, when an IPO window has been shut, those first through generally have a quality financial story and demonstrable revenues and earnings,” said Sheridan, the Wilson Sonsini partner who represented Netgear in the deal. “If the Netgear offering had not been successful it would have sent the message that the window was not open for anybody,” he said. “The question is whether the next tier down of companies — those not in the business as long or with as many years of revenues and earnings” can make it to market.

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