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The sound of a single stockholder unloading 17 million shares reverberated in the ears of Wilson Sonsini Goodrich & Rosati partner Thomas DeFilipps as he stood on the floor of the New York Stock Exchange for the closing bell on the first day of Dolby’s IPO. Dolby Laboratories Inc.’s public launch was reportedly the first time in NYSE history that the bell’s sound was altered — appropriately in this case by ringing in surround sound. But that the San Francisco-based company’s public launch was on the NYSE — as opposed to the NASDAQ — was proof itself for DeFilipps and the Wilson team that this was no ordinary technology company offering. “[It's unusual] to right out of the box take a company public on the NYSE,” said DeFilipps. “The listing standards are higher, but because of its size and profitability, [Dolby] met those tests.” The market agreed, and Dolby’s stock, which had been priced at $18, soared above $24 on opening day. The company, which sold 10.5 million shares apart from Ray Dolby’s holdings, raised $172 million after expenses. The offering required additional coordination because of the Dolby firm’s unusual history and structure. “The company had been organized for the purpose of benefiting the sole shareholder [Ray Dolby],” said DeFilipps. “There were things that had to be undone to go down the path of being a public company.” The deal made Dolby, 71, the company’s founder and for many years its only stockholder, a billionaire. Dolby collected $306 million from the IPO. He still owns another 68 million shares valued at $1.65 billion. One challenge was deciding how and how much of Ray Dolby’s IP would be transferred to the company. Prior to the IPO, Dolby Laboratories paid Dolby millions in quarterly royalties. Ultimately, the founder handed over all of his intellectual property claims. The deal was complicated because every decision required collaborating with lawyers for Ray Dolby as well as for the underwriters. DeFilipps said the entire process took 18 months — as opposed to the four to six months it takes to complete most offerings. Larry Sonsini helped out with the offering. “It was very comforting for the board. …,” said DeFilipps. “They had all the resources of the firm, including Larry, to bring to bear.” DeFilipps said his longtime friendship with Dolby’s EVP of Business and Finance, Martin Jaffe, helped land the business. (Their wives attended high school together.) Wilson Sonsini’s team included partners Herbert Fockler, Selwyn Goldberg, Terry Kearney, Ivan Humphreys, Roger Stern, David Della Rocca, Eileen Marshall and Marc Gottschalk, and associates James Clessuras, Mark Baudler, David Jedrzejek, Katherine Haar, Jonathan Chan, Randy Cinco, Lia Rose Alioto, Scott McCall and Jenna Jones. Ray Dolby was represented by Morrison & Foerster partners Justin Lee Bastian, Patrick McCabe, Paul Jahn, William Sherman and of counsel Thomas Kostic. Sidley Austin Brown & Wood attorneys represented the underwriters.

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