Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Monday, April 7, 2014

Going Public Transactions Increase in 2013

Form S-1 registration statements covering Initial Public Offerings (“IPOs”) and going public transactions are in an upswing once again.  As one consequence of the economic crisis of 2008, many qualified companies chose to postpone or entirely avoid going public and filing registration statements with the SEC.  Wall Street cheered statistics from October 2013, which show that 33 companies rose more than $12 billion in the course of the month.  That is the greatest number of U.S. IPOs embarked upon in a single month since 2007.
Many of those IPOs were sponsored by private equity firms. 
Between April and October, funds raised in private equity launches were up 77 percent, compared to the same period in 2012.
In the second quarter and third quarters of 2013, proceeds raised were $13.2 and $11.8 billion respectively.  For the first nine months of the year, the total is $32.8 billion, as compared to $26.9 billion for full-year 2012 (excluding Facebook).
Of particular interest is the fact that of the 63 IPOs that priced during the third quarter, 58 (92 percent) qualified as “emerging growth companies” under the JOBS Act.  Emerging growth companies are defined as businesses with annual gross revenues of less than $1 billion that have not raised more than $1 billion in debt within the past three years.  The JOBS act provides such companies easier access to capital by offering them reduced auditor and accounting requirements, the opportunity to “test the waters” with institutional accredited investors before filing a registration statement, and by allowing them confidential SEC review of draft registration statements. Most going public transactions involve emerging growth companies converting direct public offerings using Form S-1 registration statements.
These new statistics are an encouraging sign that the JOBS Act is fulfilling its intended purpose encouraging going public transactions.  Currently, the publicly available U.S. IPO pipeline includes 147 companies hoping to raise $27.3 billion.  At first glance, this might seem to indicate an impending downtrend, but it does not.  Because of the confidential filing provision of the JOBS Act, there are no doubt far more companies actively preparing initial public and direct public offerings than that number suggests.
The confidential filing provision for registration statements, particularly Form S-1 is clearly popular.  Of the 58 companies whose IPOs were priced during the third quarter, 50 chose to file confidentially.
Not only are the number of IPOs on the rise; their first day return is higher.  The average return of the 63 companies that priced during the third quarter and direct public offerings were 20 percent, as compared to 13 percent for the same period in 2012.  In addition, they have extended their gains, averaging a post-IPO return of 27 percent, and considerably outperforming the S&P 500, which rose 4.7 percent in the quarter.  The strongest sector was technology stocks, bringing in an average one day return of 34 percent.
All this bodes well for the U.S. markets and for companies planning to go public in the relatively near future.  Last week’s highly successful Twitter debut suggests that young companies, particularly those defined as emerging growth companies, have overcome their reservations about initial public offerings, and are ready to take the plunge.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at or visit   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855

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