Table of Contents26810121416US <strong>IPO</strong> Market Review and OutlookLaw Firm and Underwriter RankingsSelected <strong>WilmerHale</strong> Public OfferingsRegional <strong>IPO</strong> Market Review and Outlook– California– Mid-Atlantic– New England– Tri-StateTakeover Defenses in <strong>IPO</strong> CompaniesPIPE and Rule 144A Market Review and OutlookInitial Public Offerings: A Practical Guide to Going Public
2 US <strong>IPO</strong> Market Review and Outlook2008 ReviewUS <strong>IPO</strong>s – 1996 to 2008Facing the combined burden of aneconomic recession and plunging capitalmarkets, the <strong>IPO</strong> market turned inits worst performance in a generation.In 2008, there were only 31 <strong>IPO</strong>s—thelowest annual total since 1975—withgross proceeds of $24.1 billion (of which$17.9 billion came from a single offering).The year’s tallies were down 85% in dealvolume and 48% in gross proceeds from2007, ending a run of four strong yearsthat had averaged about 200 <strong>IPO</strong>s annually.US issuers86698768619975221996 1997Foreign issuers53757353 480433101998 1999446107339200091 75 7114 9 1077 1466 9 61 102001 2002 2003205 190 198 20734 32 35 58171 158 163 1492004 2005 2006 2007319222008While 2008 was a down year acrossthe board, the second half of the year waseven slower than the first. The <strong>IPO</strong> marketvirtually dried up in the second half of theyear, producing a mere six offerings raisingjust $1.0 billion. As discussed furtherbelow, the market drought continued into<strong>2009</strong>, before beginning to show signs ofrecovery in the second quarter.Source: SEC filingsEconomic conditions soured throughout2008 in the face of ongoing turmoil inthe credit markets, the continuing declinein the housing market and a stiff dropin consumer confidence—and the capitalmarkets followed suit. The Dow JonesIndustrial Average experienced thethird-worst year in its history, droppingby 34%, and the Nasdaq Compositedeclined by 41%.Every segment of the <strong>IPO</strong> market sufferedin 2008. The number of offerings byUS-based issuers fell from 149 in 2007 to22 in 2008, the number of <strong>IPO</strong>s by foreignbasedissuers decreased from 58 to 9,and the number of offerings by technologyrelatedcompanies declined from 107 to 9.<strong>IPO</strong>s by venture capital and privateequity backers dropped precipitouslyin 2008. The number of <strong>IPO</strong>s by USVC-backed companies plummeted from76 to 7—the lowest annual count inmemory. Similarly, the number of USbuyout-backed <strong>IPO</strong>s fell from 46 to 7.Among the year’s few bright spots wasVisa’s mammoth $17.9 billion <strong>IPO</strong>—thelargest US-issuer <strong>IPO</strong> in history. Otherlarge <strong>IPO</strong>s in 2008 came from AmericanWater Works ($1.25 billion), IntrepidPotash ($960 million) and GT Solar ($500million). Safe Bulkers produced the largestUS <strong>IPO</strong> Dollar Volume – 1996 to 200848.810.038.81996US issuers Foreign issuers $ billions59.728.98.730.8 32.11997Source: SEC filings40.8199895.333.761.61999108.252.755.5200041.3foreign-based-issuer <strong>IPO</strong> of 2008, withgross proceeds of $190 million, althoughits price declined 65% for the year.Despite gaining 10% on its first tradingday, the average 2008 <strong>IPO</strong> ended the year36% below its offering price. In 2007,the average <strong>IPO</strong> appreciated 15% by theend of the year. Only 16% of 2008 <strong>IPO</strong>swere trading at or above their offeringprice at year-end, compared to 55% in2007. The best-performing <strong>IPO</strong>s of 2008were Grand Canyon Education (up 57%),CardioNet (up 37%) and Visa (up 19%).9.132.2200125.46.419.0200215.26.19.1200346.539.0 31.440.415.38.7 5.2 10.930.326.229.4 31.32004200520062007Two 2008 <strong>IPO</strong>s more than doubled inprice on their opening days—Asia Time(up 143%) and Hong Kong HighpowerTechnology (up 110%)—but both endedthe year below their offering prices.The percentage of profitable companiesgoing public increased from 62% in2007 to 71% in 2008, while the medianannual revenue of <strong>IPO</strong> companiesincreased from $87.0 million to $113.5million. Both metrics evidenced the highstandards demanded of <strong>IPO</strong>s in 2008.In 2008, 9 <strong>IPO</strong>s (29% of the total)were completed by companies based in24.10.823.3 0.82008
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