2009 IPO Report - WilmerHale

More documents

Recommendations

Info

Regional IPO Market Review and Outlook11New EnglandNew England IPOs – 1996 to 2008New England suffered a precipitous dropin IPOs in 2008. The region generated justone IPO, with proceeds of $0.5 billion, in2008, after producing 23 IPOs with $3.03billion in gross proceeds in the prior year.These figures represent the region’s lowestannual IPO proceeds since 2003, and thesmallest number of deals in many years.Even in a year with historically low levelsof IPO activity throughout the country,New England’s performance in 2008 wassurprising. In the last market trough of2001–2003, the region produced an annualaverage of four IPOs. And in the giddy daysof 1996–2000, New England was hometo an annual average of 44 offerings.# of deals793.63342.591996 1997Source: SEC filings$ billions463.64220.871998 19998.044120001.02320015.4695 4 0.40 0.532002 2003 2004162.7620051.991320063.0323200710.502008In 2008, the region’s only IPO camefrom New Hampshire–based GT Solar,a provider of specialized manufacturingequipment and services essential forthe production of photovoltaic wafers,cells and modules, and polysilicon. GTSolar’s IPO was unusual in that itconsisted entirely of shares sold byits controlling stockholder.Tri-State IPOs – 1996 to 2008# of deals $ billionsLogMeIn, a provider of on-demand,remote-connectivity solutions, raised$106.7 million in a late June 2009 IPO,and its stock immediately appreciatedby 25%. We expect New England’s IPOcandidates in the remainder of 2009to be drawn primarily from the technologysectors that have been the region’s areasof strength for decades.Longer term, we expect that continuedstrong levels of venture capital investmentin New England, along with the region’sworld-renowned universities and researchinstitutions, will continue to providea fertile environment for new companiesand IPO candidates.Tri-StateThe number of IPOs in the tri-stateregion of New York, New Jersey andPennsylvania declined from 17 in 2007to 3 in 2008. Gross proceeds followeda similar course, dropping from $8.08billion to $1.68 billion. Average deal sizein the region increased again, from $475.3million in 2007 to $560.3 million in 2008.1328.251996845.731997Source: SEC filings459.53199814.755.439.35The region’s IPOs in 2008 were byAmerican Water Works ($1.25 billion),a water and wastewater utility company;RHI Entertainment ($189.0 million),a developer, producer and distributor oftelevision programming; and RiskMetricsGroup ($245.0 million), a provider of riskmanagement and corporate governanceproducts and services. All three IPOsdeclined in the aftermarket. At yearend,American Water Works was trading3% below its offering price, followedby RiskMetrics Group (down 15%)and RHI Entertainment (down 42%).89199932200014 1320017.07200240.6120032920045.37 5.17252005Venture capital activity in the tri-stateregion now trails only that of Californiaand New England. VC-backed MedidataSolutions, a provider of hosted clinicaldevelopment solutions, completedan $88.2 million IPO in June 2009, andits stock increased 17% by the end of thesecond quarter. We expect that otherVC-backed companies—including thosefrom the technology and life sciencessectors—as well as spinoffs from theregion’s established companies, will be IPOcandidates in the balance of the year.
12Takeover Defenses in IPO CompaniesDuring the past several years,either in response to pressure fromstockholders or on their own initiative,the boards of many established publiccompanies have dismantled a numberof the anti-takeover provisions thatpreviously were considered standard.IPO companies, however, continueto implement anti-takeoverprovisions despite their decliningpopularity among established publiccompanies, primarily because:■the need for takeover defenses maybe greater given the IPO company’sstate of development, growth prospectsand market capitalization;■the existence of strong takeover defenseshas not historically had an adverseeffect on the marketing of IPOs; and■unless provisions required to beimplemented in the corporate charterare put in place prior to the IPO, itwill be virtually impossible to adoptthem after the company is public.The following is a summary of the mostcommon anti-takeover provisions adoptedby public companies, and some of thequestions to be considered by an IPOcompany’s board in evaluating them:Classified BoardsShould the entire board stand forre-election at each annual meeting,or should directors serve staggered threeyearterms, with only one-third of theboard standing for re-election each year?Opponents of classified boards believethat annual elections increase directoraccountability, which in turn improvesdirector performance, and that classifiedboards entrench directors and fosterinsularity. Supporters, however, believethat classified boards enhance theknowledge, experience and expertiseof boards by helping ensure that, at anygiven time, a majority of the directorswill have experience and familiaritywith the company’s business. Supportersalso believe classified boards promotecontinuity and stability, which in turnallow companies to focus on long-termstrategic planning, ultimately leading to abetter competitive positionand maximizing stockholder value.Limitation of Stockholders’Right to Remove DirectorsShould stockholders be able to removedirectors from office without cause?One consequence of a classified boardin a Delaware corporation, unless thecompany’s corporate charter providesotherwise, is that directors can onlybe removed by the stockholders for cause.When a classified board is eliminated, thedirectors can be removed with or withoutcause. Sometimes, the right to removedirectors is further limited by requiringa supermajority vote. Institutionalinvestors react particularly negativelyto provisions that require a supermajorityvote to remove a director for cause.Limitation of Stockholders’ Right toIncrease Board Size or Fill VacanciesShould stockholders have the right toincrease the size of the board and theright to fill vacancies, or should thoserights be reserved for the board?Activist investors believe that stockholders,as the ultimate owners of the company,should have a relatively unfettered abilityto change the composition of the boardand install directors they believe will bemore responsive to stockholder wishes.Supporters of limitations on these rightsbelieve that long-term value creationrequires stability and continuity in theboard, and that investors are appropriatelyprotected against entrenchment by thedirectors’ state law fiduciary duties,director independence requirements,and the stockholders’ ultimate abilityto elect replacement directors.Supermajority Voting RequirementsWhat stockholder vote should berequired to make changes to governanceprovisions or approve mergers: a simplemajority or a “supermajority”?Opponents of supermajority voterequirements believe that simple-majorityprovisions make the company moreaccountable to stockholders, leadingto better performance. In addition,opponents believe that supermajorityrequirements can be almost impossibleto satisfy because of abstentions andbroker non-votes, thereby frustratingthe will of the stockholders. Opponentsalso view supermajority requirementsas entrenchment provisions used toblock initiatives that are supported byholders of a majority of the company’sstock but opposed by management andthe board. Supporters, however, claimthat supermajority vote provisions helppreserve and maximize the value of thecompany for all stockholders by ensuringthat important protective provisions areeliminated only when it is the clear will ofthe stockholders. When companies havesupermajority provisions, the required votegenerally ranges between 60% and 80%.Prohibition of Stockholders’ Rightto Act by Written ConsentShould stockholders have the rightto act by written consent withoutholding a stockholders’ meeting?Almost all private companies make useof written consents as an efficient wayto obtain required stockholder approvalswithout the need for convening a formalmeeting. In contrast, most publiccompanies do not allow stockholders to actby written consent. They instead requirethat all stockholder action be taken at aduly called stockholders meeting, for whichstockholders have been provided detailedinformation about the matters to be votedon, and at which there is an opportunityto ask questions about proposed business.Limitation of Stockholders’ Rightto Call Special MeetingsShould stockholders have the right tocall special meetings, or should they berequired to wait until the next annualmeeting to present matters for action?Many public companies provide thatonly the board or specified officers ordirectors are authorized to call specialmeetings of stockholders. This couldhave the effect of delaying until the nextannual meeting actions that are favoredby holders of a majority of the company’sstock. Other companies allow stockholdersholding more than a specified threshold
Page 1 and 2: 2009 IPO ReportAttorney Advertising
Page 3 and 4: 2 US IPO Market Review and Outlook2
Page 5 and 6: 4 US IPO Market Review and Outlooks
Page 7 and 8: 6 Law Firm and Underwriter Rankings
Page 9 and 10: Counsel of Choice fSERVING INDUSTRY
Page 11: 10 Regional IPO Market Review and O
Page 15 and 16: 14PIPE and Rule 144A Market Review
Page 17 and 18: AnnouncingInitial Public Offerings:
Page 19: 09_026 RPI 09/09 11,000WilmerHale r

2009 IPO Report - WilmerHale

Create successful ePaper yourself

Delete template?

Save as template?