Ping-ponging with the SEC as the IPO optimism pipeline grows

This past week, we’ve seen some positive pundit-isms towards what has been a sad year for IPOs.

Kathleen Smith, a principal at IPO-focused Renaissance Capital, expects a uptick the remaining of the year, but doesn’t expect 2016 to match the 170 IPOs and $30 billion raised in 2015, which itself was down from the 2014’s big IPO year.

“The enemy of a healthy IPO market is uncertainty and volatility. We’ve had some high volatility in the past year, but that’s moderated back down to normal levels.”

The IPO window is ready to open, “it’s just a matter of when,” said Garvis Toler, global head of capital markets at the New York Stock Exchange. “The enemy of a healthy IPO market is uncertainty and volatility. We’ve had some high volatility in the past year, but that’s moderated back down to normal levels. People need to perceive that it’s a hospitable environment.”

Liz Myers, JPMorgan’s global head of equity capital markets, reported that JPMorgan has 20+ IPOs in their global pipeline in September, and a “full pipeline” for the balance of 2017. Additionally, JP Morgan expects to see more than a dozen tech IPOs before the end of the year. Venture capitalists count more than 150 unicorns (privately held companies valued above $1 billion) in the US. IPOs bring big gains to VC firms and other early investors, allowing them to invest in the next star companies.

What do companies, especially Emerging Growth Companies, do as they prepare for their IPO?

Well… they prepare. One place to start is to understand the actual drafting registration process you’ll experience with the SEC. THIS WHITEPAPER ILLUSTRATES THAT PROCESS.

dowloand-button

What you’ll see illustrated in the whitepaper is that the SEC will absolutely PONG back your PING, looking for sharper definition on one, some or all (eek!) of these topics:

  • Acquisitions
  • Contingencies
  • Divestitures
  • Estimates
  • Fair value
  • Goodwill impairment
  • Income taxes
  • Internal controls
  • MD&A
  • Non-GAAP abuse / reconciliation
  • Segment reporting
  • Stock compensation

As your securities lawyers will clearly express, “don’t take it personally.” SEC letters are a part of the process and the back-and-forth can take months, with an average of 8 months.

Lastly, although it is a bit of a ping pong match, its NOT a competition. The SEC wants companies to succeed while simultaneously protecting investors.

 

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