Tuesday, February 26, 2019
Registration: 8:30a.m. – 9:00 a.m.
Program: 9:00a.m. – 10:00 a.m.

Mayer Brown LLP
1221 Avenue of the Americas,
New York, NY 10020

Successful privately held companies considering their liquidity opportunities or eyeing an IPO often turn to late stage private placements. Late stage private placements with institutional investors, cross-over investors and strategic investors raise a number of considerations distinct from those arising in earlier stage and venture financing transactions. Privately held companies also have become more comfortable sponsoring liquidity programs for early investors, employees and consultants, as well as allowing these holders to sell to cross-over investors in late stage investment rounds.

During our session, we will discuss:

  • Timing and process for late stage private placements;
  • Terms of late stage private placements;
  • Principal concerns for cross-over funds;
  • Diligence, projections and information sharing;
  • IPO and acquisition ratchets;
  • Participation by strategic investors;
  • Issuers and third-party tender offerings; and
  • Private secondary market opportunities

For more information or to register, please click here.

CB Insights recently published its seventh annual Tech IPO Pipeline Report.  The report notes that in 2013, the median time between first funding and IPO for U.S. VC-backed tech companies was 6.9 years compared to 10.1 years for tech companies that went public in 2018.  As we have noted in previous posts, tech companies continue to raise more significant amounts of funding prior to undertaking their IPOs.  In 2018, tech companies raised, on average, $239 million before undertaking their IPOs, which is almost 1.4x the amount raised in 2017, and over 3.7x as much as 2012 figures.

The number of new private tech unicorns has outpaced the number of tech IPOs in 2018.  After 2014, tech IPOs declined significantly and have remained at those depressed levels, with only 19 tech IPOs in 2018.  By contrast, there were 45 tech companies that became unicorns in 2018.  The mega-round financing trend, wherein companies raise over $100 million per round, was also prevalent in the tech-sector, with almost 120 mega-round financings completed in 2018.

Tech-focused private equity firms continue to acquire majority stakes in tech companies that are nearing liquidity opportunities, whether IPOs or M&A exits.  However, M&A exits continue to replace IPOs.  The report cites as examples Qualtric, Adaptive Insights, and AppNexus.

A comfort letter is a letter delivered by an issuer’s independent accountants to the underwriters or initial purchasers that provides certain assurances with respect to financial information included in a registration statement, prospectus or offering memorandum used for a securities offering. Underwriting agreements and purchase agreements typically require the delivery of one or more comfort letters, in form and substance reasonably acceptable to the underwriters, initial purchasers or their counsel, as a condition to closing the securities offering. Comfort letters assist underwriters in establishing a due diligence defense under Section 11 of the Securities Act and in creating a record of their reasonable investigation of the issuer and its financial condition to ensure there are no material misstatements or omissions in the offering document.

In this Lexis Practice Advisor® Top 10 Practice Tips, we provide 10 practice points that can help you, as counsel to underwriters or initial purchasers, skillfully navigate the task of reviewing and negotiating comfort letters.

In connection with securities offerings, the underwriters or placement agents generally negotiate a lock-up agreement with the issuer, as well as with the issuer’s directors, officers, and, in the case of initial public offerings, control persons. The lock-up agreements provide the underwriters or placement agents with some assurance that new issuer securities will not be sold immediately following the proposed offering the sale of which might disrupt the trading market for the offered securities.

In this Lexis Practice Advisor® Top 10 Practice Tips, we provide 10 practice points to consider in drafting and negotiating lock-up agreements.

Thursday, December 13, 2018
1:00 p.m. – 2:00 p.m. EDT

Despite market volatility, 2018 has proven to be a strong year for IPOs. Under the right circumstances, an Up-C structure implemented in connection with an IPO has the potential to deliver significant economic and tax benefits to financial sponsors and other selling shareholders.

During this session, Partners Anna T. Pinedo and Remmelt Reigersman will explain:

  • When an “Up-C” structure might be appropriate for an IPO candidate
  • Documenting the arrangements
  • Addressing the tax receivable agreement
  • The benefits to various stakeholders
  • Life as a public company with an up-C structure and how it impacts financial and SEC reporting
  • Undertaking acquisitions using an up-C structure
  • Unwinding an up-C structure

After this session, attendees will:

  • Understand the components of an up-C structure and when to implement
  • Counsel clients on the benefits of an up-C structure
  • Understand the economic and tax benefits to financial sponsors

Intelligize will provide CLE credit. For more information, or to register for this session, please visit the event website.

Tuesday, December 11, 2018
1:30 p.m. – 2:30 p.m. EST

During this webinar, Partner Anna T. Pinedo will provide an overview of the market trends that shaped the year, including an overview of the IPO market and notable trends, follow-on offerings, and other market developments.  In addition, she will discuss a number of the principal areas of focus for the SEC during 2018 that affect issuers, including the following:

  • Disclosure updates and simplification, the final rules and what’s to come;
  • Changes impacting executive compensation, including the Rule 701 amendment, the Concept Release on Rule 701 and Form S-8, and the focus on perk disclosures;
  • Cybersecurity guidance and disclosure and enforcement trends;
  • The amendments to the smaller reporting company definition;
  • Adoption of new accounting standards (revenue recognition and lease accounting); and
  • What to expect in 2019.

LexisNexis will provide CLE credit. For more information, or to register for this session, please visit the event website.

In this Lexis Practice Advisor® Practice Note, we provide answers to questions frequently asked by securities lawyers and their clients regarding the federal securities laws applicable to communications and publicity matters involving companies conducting initial public offerings (IPOs) and other securities offerings under the Securities Act of 1933, as amended (Securities Act).

Specifically, this practice note includes questions relating to:

  • Publicity guidelines during IPOs;
  • Publicity guidelines for follow-on offerings;
  • Roadshows and non-deal road shows; and
  • Earnings guidance issued close to a registered offering.

In November 2018, SIFMA published another primer in its recently introduced series on capital formation–this one titled “An exploration of the IPO process and listings exchanges”. The primer provides interesting statistics on IPO trends.

The primer notes the decline in the number of US listed companies.  The number of listed companies peaked in 1996 at 8,090, but is down to 4,336 at the end of 2017, or a 46 percent decline during this period.  The number of IPOs in 1996 was 860 and that was down to 173 in 2017. Deal value is also down from 1996 to 2017.  US IPOs represented only 10 percent of total global IPOs in 2017 but averaged 51 percent in the 1990s.  The decline in small cap IPOs (deal value less than $2 billion) also is well documented.  Small cap IPOs peaked in 2000 at 382, and reached a trough in 2008 with 37.  The average was 153 from 2000 to 2017, with a three-year average of 124.

The primer explores a number of theories underlying the decline in IPOs.  Among these, the primer cites the decline in equity research coverage.  Interestingly the number of research analysts has declined 10 percent from 2012 to 2016.  Budgets have declined 51 percent from 2008 to 2016 at the largest investment banks.  Whereas the average company with a market cap of $500 million or less used to have three to four analysts, now the number of analysts is down to one or two. While the last version of JOBS Act 3.0 would have required a study on research for EGCs, little attention has otherwise been directed to address the role of research coverage in the decline of smaller IPOs

A recent E&Y report notes strong IPO activity in the first nine months of 2018, with 166 completed IPOs, which raised $44.4 billion.  This compares to 179 for the full year in 2017, which raised $40.4 billion.  AXA Equitable Holdings was the largest IPO of the first nine months of 2018.  For the first nine months of 2018, VC and sponsor-backed IPOs represented only 29 percent of all IPOs, which is a five-year low for financial sponsor-backed IPOs.  During this nine-month period, financial sponsor-backed IPOs accounted for 38 percent of total capital raised in the public market, which is down from 72 percent over the prior five years.  Foreign private issuer IPOs were at an all-time high in 2018.  There were 46 IPOs during the nine-month period.  Median IPO proceeds for IPO issuers during the period was $142 million.  Healthcare remained the most active sector for IPOs.  Approximately $6.2 billion was raised in Healthcare IPOs in the first nine months of the year.  Tech companies were the second most active and raised $13.7 billion.

The report also addresses the usage of EGC IPO accommodations.  Approximately 91 percent of the EGCs that have filed since the JOBS Act became effective have relied on confidential submission.  The median number of days for EGCs from IPO Registration statement submission date to IPO was 112 days.  A notable change cited in the E&Y report is that in 2018, 56 percent of new EGCs chose to adopt new accounting standards using private company effective dates.  This may be a result of perceived challenges associated with the new standards for revenue recognition, leases, and credit losses. For the period from 2013 through 2018 (9/30), 96 percent of EGCs provided reduced executive compensation disclosures, 80 percent provided two years of audited financials, and 24 percent adopted new accounting standards based on private company effective dates.

Partner Anna Pinedo joined IFR’s US ECM Roundtable for a panel discussion that assessed the current state of the market, discussed the latest trends and developments, and gave an outlook for the remainder of the year and beyond.  Topics included the state of the IPO market; private capital to public markets; JOBS Act 3.0; SPACs as an alternative to IPO; areas of success; and the convertible bond market renaissance.

Read IFR’s special report on the Roundtable here: https://goo.gl/qJWaqR.