A Morrison Foerster Jobs Act blog highlighted some trends that certainly reflect what we note here at Vintage. IPO pricings are leaner and the companies’ subsequent budgets are smaller too – thus the demand for intelligent value.
From Morrison Foerster:
IPO market activity has recently returned to levels not seen since before the financial crisis. With 70 IPOs in the first quarter and 114 IPOs year-to-date, 2014 is off to the fastest start since 2000 and is on pace to finish with nearly 300 IPOs, which would be the highest annual total in 14 years. An important trend is that the average offering size has decreased in recent years. Thus far in 2014, the average IPO size is approximately $181.7 million, which is the lowest average in the past seven years.
In the chart below, the green line is the average size of that year’s offering in millions. The blue line is the actual count of IPOs within that year. More IPOs with smaller offerings is the trend. (The light blue line is 2014 projected.)
The belief that companies are “flush with cash” during the IPO process is now false, especially for micro and small-caps. Furthermore, all companies (regardless of capitalization) are more transparent and accountable than ever: the excess of mahogany conference rooms and front row seats are scrutinized… as they should be.
To guide our clients, we created three distinct transaction models to meet the increasing agile workflow of registration drafting. 1.) Traditional in-house at one of our offices, 2.) on-site at a client selected location and 3.) 100% virtual including a virtual data room. Which workflow fits best has many influences including complexity of the offering, travel abilities, pre-drafting organization and certainly budget. Those factors sculpt the intelligent value.
Have a great day.