IPOs slower to price regardless of fewer SEC comments in S-1 registration workflow

How-Your-IPO-S-1-Filing-Flows-To-&-From-The-SEC_2016-1

Click to download the S-! workflow whitepaper

Nothing is more certain than death, taxes and comments back from the SEC on your S-1 registration’s first draft.

It’s part of the vetting process that protects investors from, on the light-side of the spectrum, overly enthusiastic corporate projections and on the dark-side… straight up fraudulent disclosures.

To view an illustration of the process, download this whitepaper.

Comments generally fall into these eight categories:

  • Back-up (third party) verification
  • Cheap stock
  • Executive compensation and executive employment agreements
  • Financial & accounting
  • Market positioning claims
  • Non-GAAP financial measures
  • Revenue recognition
  • Segment reporting

As you see in the chart below, with data from Proskauer’s 2016 IPO Study, the lowest number of SEC comments received in a first round comment letter was 11, the average was 31 and the highest was 78. One point is clear when you juxtapose the different sectors: financial services companies received the highest number of comments. Click image to enlarge.

IPO-comments

All sectors did have fewer overall comments from previous years, which (hopefully) indicates their internal diligence is steadily improving – although the pace from initial filing to final pricing is 20% slower. Market conditions are assumed the cause. Slow and steady wins (raises) the race (capital).

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