As We Move Through 2018, IPO Trends May Be Worth Tracking
Initial public offerings (IPO) have declined in recent years, with many high-value companies electing to remain private. As we move through 2018, IPO activity is projected to increase, although the extent of the rebound is a lot less certain.
Photo courtesy of The Roaming Platypus (Unsplash.com)
2017 IPO Market in Review
Overall, the IPO market showed signs of life in 2017. According to Renaissance Capital, there were 160 total deals, which is double the number of IPOs in 2016. Proceeds also grew nearly 50 percent to $36 billion. The Renaissance Capital report does not include blank-check companies in its totals or IPOs that raise less than $10 million.
According to Renaissance Capital, IPO activity levels should have been higher, given the surging stock market and relatively low volatility. Its report cites uncertainties over the massive tax reform bill and the disappointing performance of several highly-touted IPOs as reasons for the lag.
Overall, the biggest drivers of IPO activity were the biotech and technology industries. Companies like AnaptysBio, Argenx, and Roku delivered stellar returns for investors. However, so-called “unicorns” stumbled mightily after their IPOs. While Snap’s much-anticipated IPO raised $3.4 billion, its stock dropped by 50 percent. Blue Apron’s IPO is also being called a dud. Its shares plummeted more than 70 percent in the wake of disappointing financial reports and operational challenges.
Predictions for 2018
To date, there are more than 60 IPOs publicly in the pipeline, which is a decrease from 69 at year-end 2016 and 118 at year-end 2015. However, it could still be an exceptional year, with several highly valued companies poised to make their public debut in 2018. They include Lyft, Spotify, Dropbox, and Pinterest.
According to Renaissance Capital, 2018 could be a “banner year for technology IPOs,” given a “deep bench of tech unicorns that has had years to prepare offerings.” The report further states: “Volatility is low, corporate taxes are on their way down, and public market valuations are as good as they can hope for. Many tech firms will likely need capital, while employees and investors will seek much-needed liquidity.”
Impact of Confidential Filing With SEC
The IPO market has always been difficult to predict, given that the markets can shift so quickly and dramatically. The expanded ability to file confidentially with the Securities and Exchange Commission (SEC) also shields a growing percentage of IPO activity from public view.
Snap and Twitter are two well-known examples of companies that previously relied on the JOBS (Jumpstart Our Business Start-Ups) Act provision. According to the SEC, 1,350 confidential IPO filings have been submitted, as of March 31, 2017. The SEC is hopeful that expanding the opportunity to all companies will encourage more companies to take the IPO plunge.
If you have any questions or if you would like to discuss the matter further, please contact me, Dan Brecher, at 201-806-3364.
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Supreme Court and Title VII: Implications for Reverse Discrimination
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
