United States: Proskauer Releases Annual U.S. IPO Study

March 6, 2019 (New York) – International law firm Proskauer today released its sixth annual IPO Study, which offers comprehensive analyses of U.S.-listed initial public offerings that priced in 2018 and identification of IPO trends from 2014 to 2018.

"The findings of our study give us an exclusive insight into trends to look for in the coming year. Our significant analysis of a majority of the IPOs over the last five years has allowed us to create a proprietary database that is relied upon by a variety of market participants from investment banks to private equity sponsors," said Frank Lopez, head of the Global Capital Markets Group.

The 2019 study examines data from 94 IPOs that priced in 2018 with a minimum initial base deal size of $50 million, and includes industry analyses on the health care; technology, media & telecommunications (TMT); consumer/retail, financial services; and industrials sectors. The study also includes a focus on foreign private issuers and sponsor-backed issuers. Utilizing proprietary information from more than 550 IPOs that the group has analyzed over the last six years, the study provides detailed comparisons of deal structures and terms, SEC comments and timing, financial profiles, accounting disclosures, corporate governance and deal expenses.

The 2019 study yields a number of noteworthy observations about trends and activity among 2018 IPOs, including:

  • 2018 IPO market driven by health care and tech issuers – Health care companies made up 42% of the 2018 IPO market by deal count, representing the highest percentage of any sector. Almost all health care issuers were in the biotech or biopharmaceutical subsectors. Issuers in the technology, media and telecommunications sector made up 30% of the 2018 IPO market by deal count.
  • California, Massachusetts and China-based issuers led the way – As a percentage of U.S.-headquartered issuers, California and Massachusetts led the way with a combined 54% of the IPOs in our study. Foreign private issuers also comprised a significant portion of 2018 IPOs at 24% of our population, with 16% of all IPOs coming out of China. Consistent with last year, Chinese issuers were most common in the TMT sector.
  • Average number of SEC comments continues to decline – Consistent with the trend over the last six years, we have continued to observe a decrease in the average and median number of SEC comments in the first comment letter. The first comment letter included 20 comments, on average, down from 23 in 2017. Since 2014, there has been a 49% decrease in the average number of first-round comments and a 54% decrease in the median number of comments. The overall average time from an initial confidential submission or filing with the SEC to pricing was 139 days.
  • More issuers taking advantage of confidential submission – All but one issuer in our study opted to initially confidentially submit a draft registration statement with the SEC, up from 90% of issuers in 2017. The SEC expanded the non-public review process to all issuers effective July 10, 2017, so 2018 was the first year we were able to observe the full impact of this policy change. Prior to the change, the confidential submission process was limited to emerging growth companies under the JOBS Act and a non-public submission process was available to certain foreign issuers.
  • Continuing use of scaled financial disclosures - Consistent with the trend we have observed over the last six years, an increased number of EGCs included two rather than three years of audited financial statements. This percentage has increased incrementally from 60% in 2014 to 81% in 2018. The number of EGCs including only two years of selected financial data also reached a high in 2018 at 71%. In addition, we observed that 15% of EGCs included one year of audited financial statements in their initial draft registration statement, up from 12% in 2017 and 6% in 2016.
  • Increase in percentage of issuers disclosing a material weakness – The percentage of issuers disclosing a material weakness was 46%, which is the highest percentage we have observed in the life of our study. 77% of issuers with a material weakness priced in or above the range, as compared to 86% of issuers that did not have a material weakness.
  • Multiple class structures remain common for tech IPOs – Multiple class capital stock structures remained prevalent in 2018. We found that 15% of issuers went public with a multiple class capital stock structure. This was predominantly driven by issuers in the TMT sector, in which almost half of issuers went public with a multiple class capital stock structure.
  • Insider purchasing continues to be common in health care sector - From 2017 to 2018, we saw a significant increase in insiders purchasing in IPOs from 33% in 2017 to 53% in 2018. The trend was driven largely by the health care sector in which 77% of deals included insiders purchasing. In health care IPOs, an average of 28% of the base deal was purchased by insiders. IPOs with insider purchasing were more likely to price in or above the range than those without insiders purchasing.
  • More issuers going public to establish public market for their common stock – In 2018, we noted that a significant number of issuers disclosed in the Use of Proceeds section of the IPO prospectus that the principal purpose for the offering was to establish a public market for their common stock. This or similar language was most common in TMT and included in 57% of issuers' prospectuses in the sector.

DOWNLOAD: Discover the trends shaping an evolving IPO market

Proskauer Releases Annual US IPO Study

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions