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 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
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
 
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 (you must 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