United States: The Road To IPO: Legal and Regulatory Insights into Going Public - October 2013 IPO Market Review

Last Updated: November 19 2013
Article by David A. Westenberg

Despite the government shutdown and uncertainty regarding the debt ceiling, the IPO market produced 22 IPOs in October—eight more than the 14 IPOs in October 2012 and the highest number for any month since the 24 IPOs in November 2007. Filing activity also appears not to have been impeded, with IPO filings in the month equal to September's total and the highest October total since 2000.

The October IPO count brings the year-to-date total to 143 IPOs, 40% higher than the 102 IPOs in full-year 2012, and a single IPO behind the January–October average of 144 IPOs recorded between 2004 and 2007—a period with an annual average of 186 IPOs.

October's gross proceeds of $5.79 billion was the highest monthly figure for 2013 and the fifth highest monthly figure since the start of 2008. Year-to-date gross proceeds of $31.62 billion now trail the $34.15 billion gross proceeds through the first ten months of 2012 by only 7%—the 2012 figure buoyed by Facebook's $16.0 billion offering.

Emerging growth companies (EGCs) continue to dominate the IPO market, accounting for 83% of all IPOs through October—slightly higher than the 76% market share claimed by EGC IPOs last year, following the enactment of the JOBS Act in April 2012.

The "moonshots" (an IPO that doubles in price on its opening day) by The Container Store, Potbelly and Voxeljet bring the 2013 count to six. The three were up 101%, 120% and 122%, respectively, on their first day—the second, third and sixth best first-day gains of the year. No other year has seen more than a pair of moonshots since the tally of 81 in 2000, and there have been a total of only ten moonshots in the intervening years. The average IPO company in the first ten months of 2013 has enjoyed a 22% first-day gain from its offering price—surpassing the 16% average first-day gain for full-year 2012. In this period, 22% of IPOs were "broken" (IPOs whose stock closes below the offering price on their opening day), compared to 20% in all of 2012, but this percentage still represents the second-lowest level of broken IPOs since 2007.

At the end of October, the average 2013 IPO company was trading 39% above its offering price and 32% of the year's IPOs were trading at least 50% above their offering price. Overall, 75% of the year's IPOs were trading above their offering price at October month-end.

The median deal size for October IPOs of $222.5 million was more than twice the year-to-date median of $105.0 million—partly explaining the high gross proceeds for the month. The year-to-date median offering size is 11% above the full-year 2012 figure of $94.3 million. The median deal size for VC-backed companies was $78.4 million—the lowest level since the $72.0 million median in 2006—while the median deal size for non-VC backed companies was $230.0 million, 58% higher than the prior ten-year average of $146.0 million.

The median annual revenue of IPO companies in 2013 remains well below the 2012 level, reflecting the higher percentage of emerging technology and life sciences companies going public. Median annual revenue decreased by a third, from $133.6 million in 2012 to $89.1 million in the first ten months of 2013—the lowest level since the $74.5 million median in 2007. Life sciences IPO companies in the first ten months of the year had median annual revenue of just $11.6 million. EGCs completing IPOs had median annual revenue of $63.6 million, compared to $2.48 billion for other companies.

The percentage of profitable companies going public declined from 55% in 2012 to 43% in the first ten months of 2013—the lowest level since the 26% in both 1999 and 2000.

October IPO activity consisted of offerings by the following companies listed in the order they came to market:

  • Burlington Stores, a national off-price retailer of high quality branded apparel, priced above the range and ended its first day with a 47% gain.
  • RE/MAX Holdings, one of the world's leading franchisors of real estate brokerage services, priced above the range and saw a first-day gain of 23%.
  • Potbelly, a fast-growing neighborhood sandwich concept offering toasty warm sandwiches, signature salads and other fresh menu items, priced above the range and soared 120% on its first day.
  • LDR Holding, a global medical device company focused on designing and commercializing novel and proprietary surgical technologies for the treatment of patients suffering from spine disorders, priced within the range and gained 29% on its first day.
  • SFX Entertainment, a producer of live events and entertainment content focused exclusively on the electronic music culture, priced an IPO upsized by 20% at the top end of the range and saw a first-day loss of 9%.
  • Antero Resources, an independent oil and natural gas company, priced an IPO upsized by 19% above the range and ended its first day with a gain of 18%.
  • MacroGenics, a biopharmaceutical company focused on discovering and developing innovative monoclonal antibody-based therapeutics for the treatment of cancer and autoimmune diseases, priced an IPO upsized by 25% at the top of the range and gained 56% in first-day trading.
  • Stonegate Mortgage, a non-bank, integrated mortgage company, pricing a downsized IPO below the range and saw a first-day gain of 14%.
  • Consumer finance company Springleaf Financial priced an upsized IPO at the high end of the range and gained 13% on its first day.
  • Veeva Systems, a provider of industry-specific, cloud-based software solutions for the life sciences industry, priced above an upwardly revised range and ended its first day up 86%.
  • Germany-based Voxeljet, a provider of high-speed, large-format 3D printers and on demand parts services, priced at the low end of the range and jumped 122% on its first day—the first company since 1999 to double on its first day after pricing at the low end of its range.
  • Aerie Pharmaceuticals, a clinical-stage pharmaceutical company focused on the discovery, development and commercialization of first-in-class therapies for the treatment of patients with glaucoma and other diseases of the eye, priced an IPO upsized by 28% below the range and saw a first-day gain of 6%.
  • CommScope Holding, a global provider of connectivity and essential infrastructure solutions for wireless, business enterprise and residential broadband networks, priced below the range and ended its first day one cent shy of its offering price.
  • Endurance International Group, a provider of cloud-based solutions designed to help small- and medium-sized businesses, establish, manage and grow their businesses, priced below the range and declined 6% on its first day.
  • Paris-based Criteo, an ad tech company that enables e-commerce companies to leverage large volumes of granular data to efficiently and effectively engage and convert their customers, priced an IPO upsized by 12% above an upwardly revised price range and saw a first-day gain of 14%.
  • Surgical Care Affiliates, an operator of one of the largest networks of outpatient surgery facilities in the United States, priced at the top of the range and ended its first day up 13% from its offering price.
  • Veracyte, a diagnostics company pioneering the field of molecular cytology to improve patient outcomes and lower healthcare costs, priced an IPO upsized by 6% at the low end of the range and saw a first-day gain of 2%.
  • 58.com, an online marketplace serving local merchants and consumers in China, priced above an upwardly revised price range and ended its first day up 42%.
  • Essent Group, a private mortgage insurance company, priced above the range and saw a first-day gain of 26%.
  • Marcus & Millichap, a national brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services, priced below the range and ended its first day with a 12% gain.
  • Qunar, the leading search-based commerce platform for the travel industry in China, priced above the range and saw a first-day gain of 89%.
  • The Container Store Group, the leading specialty retailer of storage and organization products in the United States, priced at the top end of an upwardly revised range and ended its first day up 101%.

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
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

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