The U.S. IPO market began 2017 with a solid start, with 25 IPOs raising nearly $10 billion in the first quarter and another 31 IPOs in the second quarter through May 15. We have a number of U.S. and non-U.S. clients moving ahead on U.S. IPO plans in 2017. Will the IPO market in the United States experience a renaissance? While IPOs in the U.S. fell off the map after a slowdown in 2015, the market looks to be bouncing back.

The 25 IPOs in Q1 2017 differs drastically from 2016’s first quarter, which had just 8 IPOs raising $0.7 billion. First quarter IPO activity in 2017 also reflected broad sector diversification, with energy, technology, and healthcare deals topping the lists. Tech raised the greatest amount of money thanks to the long-awaited Snap IPO of $3.4 billion, the largest IPO of a U.S. tech company since Facebook. Yet, the energy sector had the highest number of IPOs, with five companies going public last quarter—more than the total number of energy IPOs in all of 2016. [1]

Chart A: U.S. IPO Activity (2017 data through May 15, 2017)

chart a

These signs of life come after a drop off in IPOs in 2015 and 2016, a steep fall after the IPO boom of 2014. The U.S. IPO market has been slow to regain strength after the tech boom of the late 1990s, facing a particularly major blow after the 2008 financial crisis. With only 31 IPOs completed in 2008, the market had its lowest number of IPOs in over the last 20 years. 2014 marked the most active year for IPOs in the U.S. since 2000, with 275 IPOs and $86.6 billion raised. Market instability in the second half of 2015 and early 2016 hurt the U.S. IPO market, but I believe that the solid start to 2017 indicates a possible renaissance of companies going public. If the momentum carries into the following quarters, I believe we could see a steady revival of the IPO market from 2017 into the next few years. Still, there are a number of bigger companies that have continued to raise private capital and hold off on an IPO, including Airbnb, Lyft, and Houzz. Airbnb is leading the pack with $1 billion raised in its latest round of funding, while Lyft just closed a $600 million round.  [2]

Chart B: Key US IPO Statistics

IPO Stats Graphic Final

IPO Statistics for the First Quarter of 2017:

  • 25 U.S. IPOs and $9.9 billion raised. This compares to 8 IPOs and $0.7 billion raised in the first quarter of 2016.
  • Average IPO performance in 1Q 2017: 11% gain.
  • Snap raised $3.4 billion in the largest US IPO since Alibaba in 2014, and the largest IPO of a US tech company since Facebook in 2012.
  • The quarter’s second-largest IPO, Blackstone’s $1.5 billion offering of home rental REIT Initiation Homes, was also a larger deal than any IPO in 2016.
  • Nearly half of all the IPOs in the first quarter were backed by private equity, beating venture capital for the first time since 2013.
  • The median deal size for the first quarter was $190 million, the largest it has been in years and double the full-year 2016 median.
  • Energy led the quarter in terms of deal count, with 5 IPOs. The Keane Group had the largest deal, raising $584.7 million.
  • Through May 15, 2017, there have been 56 U.S. IPOs, a 154.5% increase from the same date last year.
  • Global IPO issuance totaled $24.2 billion in the first quarter of 2017, with 70 deals closed. Asia Pacific led the market with 41% share of all proceeds raised, while North America took a close second with 39% share of proceeds.

[1] Please note that there will be some variance in the statistics for IPOs generally. This is because most data sets exclude extremely small initial public offerings and uniquely structured offerings that don’t match up with the more commonly understood public offering for operating companies. The IPO data in this post is based on information from Renaissance Capital- manager of IPO-focused ETFs-   

[2] Listed in company profiles at

The IPO market in 2016 was abysmal, especially for the life sciences sector. Annual IPO proceeds fell to the lowest level since 2003. The IPO market forecast for 2017 is uncertain. Some life sciences companies that went public during the last IPO wave ending in 2015 still have plenty of cash yet they have “hit the wall” clinically, making them “fallen angels”. In this environment, the “fallen angel” reverse merger has emerged as an attractive way for many promising life sciences companies to raise capital and to go public.

In response to these trends, my colleague Matt Gardella and I have assembled a stellar panel of experts for a discussion about fallen angel reverse mergers as an alternative to the traditional IPO. Please join us at Mintz Levin on Monday, March 6th starting at 3:00 PM to learn whether this important approach to going public might be right for your company. Our panel will provide the perspectives of the deal lawyer, the private company, the fallen angel, the investor, the investment banker, and the Nasdaq listing consultant. You will gain insights into the key issues involved in evaluating a fallen angel reverse merger strategy, negotiating a deal, smoothly completing a transaction, and being ready for life as a public company.

Please note: This panel is an in-person event at our Boston offices with a networking period afterwards.

Click here for information and registration.

On Monday, October 19, I’ll be moderating a panel on Strategic Considerations for Navigating a Dual-track M&A and Initial Public Offering Pathway at the Association of Corporate Counsel’s Annual Conference here in Boston. I’ll be joined on the panel by Pete Zorn, Esq., VP of Corporate Development and General Counsel of Albireo Pharma; Stan Piekos, former CFO of NEXX Systems; and Joe Ferra, Managing Director in the Healthcare Investment Banking Group at JMP Securities. If you’re attending the ACC conference, we hope you can join us that day at 4:30 for what we expect will be a great discussion. Continue Reading ACC Annual Conference Panel: Dual-Track M&A and IPO Pathways

On October 13 from 1 – 2:30 pm ET, join Pam Greene and a panel of other experts for a timely webinar covering Regulation A+: Practical Tips and Guidance for Launching a Mini-IPO. Regulation A+ went into effect in June 2015 to allow private US and Canadian based companies to raise equity – up to $20 million under Tier I and up to $50 million under Tier II – from both accredited and nonaccredited investors, subject to certain limitations.

During this webinar, our distinguished panel, including Pam Greene, member in the Corporate and Securities Practice at Mintz Levin;   TJ Berdzik, CFA, of StockCross Financial Services, Inc.; Maggie Chou, of OTC Markets; Yoel Goldfeder, of Vstock Transfer; and Rudy Singh, of S2 Filings, will discuss the legal and business considerations in launching a Tier II Regulation A+ offering, how investors can achieve liquidity through the OTC Market, and why many are calling Tier II offerings a “Mini-IPO”.

We hope you can take part in what is sure to be an informative discussion. Click here to register.

IPO recovery? Last year was the most active year for IPOs in the United States since 2000. That’s right: an astounding 275 IPOs were completed in 2014, topping the 2013 total of 222 by more than 23%.[1] Total U.S. IPO proceeds also shattered 2013’s high-water mark of $55 billion (most since $96.9 billion in 2000) with a whopping $85 billion in proceeds. These proceeds, including the highest quarterly total (Q3: $37 billion) since the fourth quarter of 1999 ($46 billion), were boosted by the record-setting $22 billion IPO from Chinese e-commerce giant Alibaba in September 2014.[2]  The year 2000 (over 400 IPOs) was the last year of a 10-year boom in US IPOs that reached its peak in 1996 (over 700 IPOs).

After the “irrational exuberance” of the tech bubble of the late 1990s, the U.S. IPO market has been slow to regain momentum. It took four years to cross the mark for 200 IPOs in a year, after which the market was roughly flat for another three years. This slow growth was dealt a major blow, however, by the 2008 financial crisis: only 31 IPOs were completed in 2008, and it wasn’t until 2013 that we crossed the mark for 200 IPOs in a year again, with a total of 222 IPOs.

US IPO Activity between 2000 and 2014


2014 U.S. IPO Statistics:

  • 275 IPOs, $85.2b raised. 275 IPOs represents a 23% increase over 2013 totals.
  • Highest sector total: 102 healthcare IPOs, boosted by the continued biotech boom. Biotech issuance nearly doubled from 37 in 2013 to 71 in 2014, good for 25% of total deal volume.
  • Average IPO performance: 21% (above 10-year mean, but below 41% in 2013).
  • Alibaba and 10 other companies posted >$1b deals, a post-2000 record.
  • Energy IPOs beat their previous record with over $12b in proceeds raised. This includes traditional oil and gas companies.
  • With 7 IPOs in excess of a billion dollars, the financial industry increased IPO proceeds by 82% over 2013. The number of offerings fell by 20% to 36, however.
  • Valuation pressures were higher in 2014 than in 2013: on average, IPOs priced 7% below the midpoint, with 40% coming to market below the proposed range (second highest level in the past decade).
  • The current backlog of publicly filed potential IPOs sits at around 125 companies.  I expect that we will see more than 200 IPOs in 2015 – but we will see if the market shows continued growth and tops last year’s total.

Chart of largest US IPOs

[1] Please note that there will be some variance in the statistics for IPOs generally. This is because most data sets exclude extremely small initial public offerings and uniquely structured offerings that don’t match up with the more commonly understood public offering for operating companies. The IPO data in this post is based on information from and Renaissance Capital- manager of IPO-focused ETFs-

As a company prepares for an IPO, the last thing to sometimes be considered is the potential of future litigation. Although going public can of course be a very good thing for a company, its directors, its initial investors and its stockholders, there is always the chance that an IPO will not perform as expected.  The price paid for an unsuccessful IPO may be more than just monetary, however. Lawsuit upon lawsuit may be filed against the company and its directors and officers (e.g., see Facebook’s post-IPO faceoff with its investors). Furthermore, depending upon the severity of any given problem that could arise, an unsuccessful IPO could also draw the attention of securities regulators. IPO-related litigation and formal or informal investigations can cost millions or more to both defend and resolve.

Due to the possible liabilities that may stem from an IPO, it is important that D&O policy considerations do not fall to the bottom of the priority list when planning for an IPO. One of the worst things that could happen is for the company or its directors to later be surprised to find out it or they are not covered for costs incurred in defending any lawsuits or investigations that could arise. To avoid such a major pitfall, we have compiled a list of top issues concerning D&O policies that — at a minimum — should be considered during the planning for any IPO:

  1. Retroactive Date Exclusion – Coverage is eliminated for all wrongful acts preceding this date.  Therefore, coverage does not include matters arising from pre-offering activity, including activities relating to the road show and preparation of the prospectus. This exclusion should be eliminated, where possible.
  2. Definition of “Claim” – D&O policies provide coverage for “Claims” made against directors.  The Claim definition should therefore be drafted in broad terms and should expressly include coverage for regulatory/SEC investigations, securities claims, employment claims, foreign extradition requests and derivative shareholder claims.
  3. SEC Investigation Coverage – Coverage for an investigation should be triggered by receipt of a subpoena, an investigative order, or any similar investigative document.  The trigger should not hinge on an insured person being identified in the investigative document as a target, because, in reality, individuals are rarely so identified.
  4. Definition of “Loss” – The broadest possible definition of “Loss” should be sought, and should expressly include coverage for punitive, exemplary and multiplied damages, if permitted, as well penalties in connection with violations of Section 11 and Section 12 of the Securities Act that can sometimes be deemed an uncovered disgorgement/restitution of ill-gotten gain.
  5. Final Adjudication Clause – To maximize coverage for claims asserting deliberately criminal or fraudulent behavior, which is always excluded from D&O policies, applicability of such exclusion should be conditioned upon the establishment of such conduct by a final, non-appealable adjudication, thereby providing defense costs up until such threshold is met.
  6. Severability Clause – Coverage for claims is often eliminated where an insured person had knowledge of circumstances that later give rise to such claims, which was not disclosed in the insurance application.  To ensure that other insureds that did not have such knowledge can access the policy proceeds in defense of the claim, the policy should include a severability clause, which prevents the carrier from imputing knowledge from one insured to the other.
  7. Priority of Payments Clause – This clause should be drafted to clearly state that proceeds are paid out first to directors and officers and only afterward to the company.  This will prevent a bankruptcy trustee from attempting to “hijack” proceeds owed to the directors, or preclude a company from attempting to similarly limit the directors’ recovery under the policy.

While this list is not exhaustive, it can be used as a starting point of reference.  Companies, as well as their directors, should keep in mind that D&O insurance can vary significantly with respect to terms and conditions from carrier to carrier. As with any contract, a more careful review of the exact terms and conditions is necessary.