Perspectives on MiddleMarket Equity Capital
IPO On-Ramp Accelerates Capital Formation While Small Issuers Continue to Stall
May 2014 A CohnReznick LLP Report
game chang • er noun: a newly introduced element or factor that significantly changes an existing mindset, situation, or activity
Table of Contents
Today’s Financing Environment: A “Risk On” Posture...............................1 Legislation Opens the Capital Spigot........................................................3 Analysis of Capital Formation in 2014―What Have We Discovered?.......7 Preparing to Take Advantage of Equity Markets....................................15 What’s Next?..............................................................................................17 Contributors and Upcoming Events.........................................................18 Appendix....................................................................................................19 About CohnReznick’s Capital Markets Group........................................30
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Preface In this report―the first in a series analyzing middlemarket equity capital formation―CohnReznick demonstrates the positive impact the Jumpstart Our Business Startups (JOBS) Act has had on middlemarket businesses (defined in this report as those businesses with market capitalization of $100 million to $1 billion) in the first quarter of 2014. It is clear that economic and regulatory forces are enhancing the potential for middle-market companies to access capital. Equity capital markets had robust activity in the first quarter, as issuers rushed to take advantage of the lower hurdles offered by the JOBS Act and the continued strength of the broader market. We anticipate the high levels of middle-market financing activity to continue apace throughout 2014 as there is evident investor appetite both for IPOs and for seasoned issuers. Unfortunately, our analysis of Q1 transactions reveals a continued dearth of small IPOs (under $50 million in proceeds). The lack of capital market participation in this sector threatens future middle-market growth and demonstrates that legislators and regulators have more work to do. We expect to see a steady stream of pro-equity capital formation legislation from Congress and enactments by the U.S. Securities and Exchange Commission to address this concern and further fuel middle-market growth. For these reasons, CohnReznick is optimistic in our outlook for equity capital formation over the next 12 months. The window of opportunity for middle-market companies considering an IPO or follow-on transaction has cracked open, and with additional legislative and regulatory action expected, soon it will open wide enough to be a game changer for middlemarket growth. .
Dom Esposito Partner, National Practice and Growth Director
“The window of opportunity for middlemarket companies considering an IPO or follow-on transaction has cracked open, and with additional legislative and regulatory action expected, soon it will opened wide enough to be a game changer for middle-market growth.”
Today’s Financing Environment: A “Risk On” Posture
CohnReznick believes the financing environment will remain opportune for middle-market business owners. In the equity markets, the Federal Reserve, whose policies have contributed demonstrably to the stock market’s rally over the past few years, bears close watching. Even if the Fed’s liquidity taps tighten, we believe the market will benefit from continued regulatory and legislative reform (as detailed below) designed to facilitate capital formation for small and middle-market companies. • Debt Markets Attractive but Trading Lower – Interest rates may tick up in response to modestly better growth, but they will remain low compared to historical norms, continuing the attractive market for borrowers. While an improved economy typically leads to an increased appetite to lend to smaller and middle-market companies, there is a massive deleveraging of the banking system underway in the wake of the Credit Crisis and the Dodd Frank Act. Banking regulations that raise reserve requirements will result in a drive to increase equity on the balance sheets of lending institutions. This, in turn, decreases the amount of capital that banks can earmark for investment. What does this mean for middle-market companies? CohnReznick expects the regulations may continue to limit the supply of debt capital, particularly for smaller companies. • Capital Shift into Stocks Drives Equity Capital Formation – As interest rates tick up, bond portfolios will be marked down. Against this backdrop, investors may shift assets into stocks. This would help propel the equity new issue market forward. In addition, as economic conditions improve, appetite for risk-taking should also improve, which bodes well for the equities of small and middle-market companies.
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Today’s Financing Environment: A “Risk On” Posture What does CohnReznick think? In this positive financing environment, management and investors may be going on the offensive in a “risk on” posture. Why? They are more concerned about being left behind than about the consequences if things go wrong. This bodes well for capital formation, growth, business conditions, and gradually tightening monetary policy. The key risk to the scenario stated above, however, will be geopolitical instability including: the potential for worsening hostilities between Russia and the Ukraine; the possibility of deflation in Western Europe; a continued softening of growth rates in Asia, especially China; and the unpredictability of the Middle East. We’re reminded of the cliché: “In the land of the blind, the one-eyed man is king.” While we do face our share of domestic challenges, the United States may be an island of stability in an ocean of global uncertainty for the next 12 months.
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Perspectives on Middle-Market Equity Capital ― May 2014
• Higher Commodity Prices in U.S. Dollar Terms – An improving economy will lead to an increased demand for commodities and real estate. Commodity prices may be driven up further due to expected appreciation in the U.S. dollar, as interest rates in the U.S. rise relative to other countries around the globe that are experiencing slackening demand. • Merger & Acquisition Activity Higher – M&A activity is highly correlated to stock market performance and economic growth. In down-market cycles, many pundits expect M&A to increase because acquisition prices decline, but, in fact, the reverse is true. Acquirers undertake strategic acquisitions when stock prices are strong and their own buying power is increased. In the current environment, M&A backlog is building as corporations enjoy better business conditions, and managements are focused on growth planning and strategic acquisitions. Middlemarket companies will be both buyers and sellers, becoming acquisition targets of larger cap competitors and mining smaller companies to enter new markets and increase vertical integration.
Legislation Opens the Capital Spigot
The original JOBS Act―an “omnibus bill” that rolled together six separate pro-capital formation bills into one―was informed, in large part, by the research of this report’s principal authors (see contributors, pg 18), whose ideas were adopted by the Congressional representatives behind the various bills. We attribute the dual decline in the small IPO market and in the number of publicly listed companies to the shift from telephone-quoted markets to electronic markets in 1998, and not to the Sarbanes-Oxley Act as popularly diagnosed. This abrupt change in market structure undermined the economic incentives sustaining interest and profitability in the market making of small cap stocks. CohnReznick believes the JOBS Act was the single most important piece of pro-capital formation legislation in a generation―and activity in the first quarter of 2014 reflects that there may be a harbinger of a secular shift in financial markets. The JOBS Act has not only caused Congress to be more aware of the issues impacting equity capital availability and led to bipartisan collaboration to find market-driven solutions to spur growth and innovation; it has unleashed a revolution of services to support equity capital formation for small and middle-market businesses. How? The following JOBS Act provisions are currently enabling the capital formation needs of middle-market businesses or will do so in the near future:
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Legislation Opens the Capital Spigot “It is exciting that healthcare, pharmaceutical, and biotechnology companies have embraced Title 1 of the JOBS Act to reduce the inherent risks involved in accessing the IPO marketplace. The fact that more than 80% of the companies that qualify for EGC status are using some provision of Title 1 speaks louder than words.” ― Alex Castelli, Partner, Technology and Life Sciences Industry Practice Leader
Testing the IPO Waters: Emerging Growth Companies Significance: Makes it more attractive for private companies to access the public markets by allowing them to decrease the up-front costs of going public and to cut the risk of an IPO failure by allowing them to pre-market their shares. Title I of the JOBS Act enables companies to continue to market their shares by meeting and communicating with institutional investors. Previously, most attorneys would counsel clients to shut down their marketing at least six months before filing a registration statement with the SEC. For many companies this resulted in a year-long blackout. It isn’t surprising that more than 80% of the companies qualifying for Emerging Growth Company status (revenues less than $1 billion) are availing themselves of Title I provisions, taking advantage of such benefits as confidential filings and delaying compliance with Section 404(b) of Sarbanes Oxley. It has been a clear success. Are there notable industries impacted? For companies that have complicated stories―especially technology-intensive stories such as those found in the biotechnology industry―the ability to “test the waters” must seem like “just what the doctor ordered.” Institutional investors simply could not get comfortable in making a multimillion dollar investment based on only one 45-minute meeting with management on the IPO roadshow. Now, management teams have the opportunity to develop real relationships with institutional investors over time which can have significant benefits as it leads to: • Offsetting market risk and the risk of a failed transaction by building a better book of investor demand; • Higher proceeds and lower cost of capital; and • Better aftermarket stock price performance. In his recent OpEd in The Wall Street Journal entitled, “Hey, Washington, the JOBS Act You Passed is Working,” AOL co-founder Steve Case, stated that “the self-executing IPO on-ramp is starting to make a real difference. IPOs are up 70% this year [and]…Technology-company IPOs are forecast to hit their highest level in more than a decade.”
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Perspectives on Middle-Market Equity Capital ― May 2014
Tick Size Pilot Program Significance: Improves aftermarket support of small-cap and middle-market companies by increasing tick sizes (the increment in which a security can be quoted). What would higher tick sizes achieve? Aftermarket support for small and mid-capitalization stocks is weaker than in the ‘80s and ‘90s because the shift to trading-oriented computerized stock markets made aftermarket support for small public companies unprofitable. CohnReznick believes that higher minimum tick sizes may induce market makers to become more active in committing capital, sales, trading, and research resources to support smaller capitalization stocks. In turn, this could lead to an increase in capital allocated by institutional investors to small and middle-market public companies which would raise prices and improve (lower) the cost of capital experienced by their management, investors and boards of directors.
Equity Crowdfunding Significance: Title II of the JOBS Act is improving access to capital for start-ups and early stage companies by enhancing “accredited crowdfunding” efforts. Title III, currently awaiting SEC rulemaking, will further accelerate the pace of capital formation by allowing for “non-accredited crowdfunding.” Title II of the JOBS Act repealed the prohibition against general solicitation of accredited investors. It enables corporations to issue press releases about private placements and to speak on television and at conferences about the placement. As a result, equity crowdfunding platforms such as Crowdfunder, Angel’s List, EarlyShares.com, Microventures, Fundersclub, and CircleUp have helped equip firms to raise funds in larger amounts than they otherwise would have raised before Title II took effect. Title III is on the horizon. “If Americans allocate just 1% of their investable assets into Title III equity crowdfunding, it will be a $300 billion market,” says Heather Schwarz-Lopes, CSO and Co-Founder of EarlyShares. “Equity crowdfunding will be a tremendous capital raising tool for entrepreneurs and small business owners, since it will enable them to give their entire networks the chance to become owners in their ventures.”
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Legislation Opens the Capital Spigot Regulation A+ Significance: Makes it less costly and less risky for small and middle-market companies to access public capital in amounts up to $50 million over any 12 month period by increasing the upper bound of proceeds from $5 million
What does CohnReznick think? If the SEC creates adequate incentives
and by removing costly state-by-state
for liquidity providers in the aftermarket
(“Blue Sky”) registration requirements.
(higher tick sizes or quoted markets),
Originally passed in the wake of the Great Depression to stimulate
we believe the number of IPOs― especially those of smaller and
job growth, Regulation A allowed corporations to raise up to $5 million in equity from public investors exempt from registration with the SEC. Title IV of the JOBS Act seeks to reform this
middle-market companies― would grow dramatically over the next five to ten years, resulting in significant
flawed, and thus seldom used, method
job growth for the
of raising capital and bring it into the
U.S. economy.
21st Century.
The first step toward modernization is that Congress has mandated that Regulation A’s upper bound be increased from $5 million to a more practical $50 million in proceeds over any 12 month period (there is a CPI escalator intended to make sure that this limit is adjusted for inflation). It requires the publication of audited financial statements and prohibits so-called “Bad Actors.” One of the primary reasons the prior version of Reg. A was rarely used by corporate issuers is because there was no exemption from state (“Blue Sky”) registration. State-by-state registration, especially for small amounts of money, likely made Reg. A an impractical alternative to the traditional Reg. D private placement to accredited (non-public) investors that had no dollar limit. The second step toward modernizing Reg. A is to pre-empt state-by-state Blue Sky registration―a path the SEC is clearly traveling. To be maximally effective, however, the SEC must maintain access for all investors, including the retail public; eliminate any resell restrictions; and provide exchange listing options that do not trigger a full blown registration process.
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Perspectives on Middle-Market Equity Capital ― May 2014
Analysis of Capital Formation in 2014 ―What Have We Discovered?
Overview Equity capital markets activity was robust in the first quarter, with 74 IPOs compared to only 42 IPOs in Q1 2013. In addition Q1 2014 results reflected that there were 278 follow-on offerings completed. Technology, healthcare, and the financial services sectors topped the industry list with the greatest IPO activity. Stripping out the financial vehicles, there were 66 corporate IPOs and 233 corporate follow-on offerings. CohnReznick’s focus in this report is on the middlemarket, defined throughout this report as businesses with a market capitalization of $100 million to $1 billion. Within this space, there were 47 IPOs and 101 follow-ons, demonstrating strong growth over the prior year’s period and over the previous quarter. One point of concern is the continued deficiency in the number of small IPOs (under $50 million in proceeds)―a disturbing trend that has continued unabated since the market structure changes in 1998 (see Figure 1). Only 12 of the 66 corporate IPOs in the first quarter raised less than $50 million.
“The JOBS Act has made it less complicated for growing technology companies to utilize IPOs as an attractive and realistic strategy to raise capital. As the United States economy continues to strengthen, middlemarket technology companies with their eye on raising capital in 2014, should find plenty of options.” ― Alex Castelli, Partner, Technology and Life Sciences Industry Practice Leader
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Analysis of Capital Formation in 2014 ―What Have We Discovered? Figure 1. Small IPOs Remain Largely Absent Despite Increased Overall Equity Financing Activity
100% 90% 80%
Transactions raising at least $50 million
70% 60% 50% 40% Transactions raising less than $50 million
30% 20% 10% 0% 1991
1993 1992
1995 1994
1997 1996
1999 1998
2001 2000
2003 2002
2005 2004
2007 2006
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Regulation NMS
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2013 2012
Q1: 2014
Sarbanes-Oxley Decimalization Regulation ATS Order Handling Rules
What does CohnReznick think? CohnReznick believes that transactions at the small end of the market will continue to languish until the JOBS Act provisions described above are fully implemented by the SEC. Why? The economics that supported small and mid-cap infrastructure were destroyed by regulatory changes that began in 1998. That year, Reg ATS instituted regulations designed to protect investors from concerns arising from increased use of alternative trading systems such as electronic communication networks. Stocks used to trade at a tick size of 25 cents or 12.5 cents until 1998, when Reg ATS took effect. At that time, brokers could make money by supporting small and mid cap stocks, and providing research coverage. Today, with tick sizes are one cent, brokers cannot make money in those stocks, so they suffer in their efforts to raise capital. 8
Perspectives on Middle-Market Equity Capital ― May 2014
Analyzing Q1 IPO Results Healthcare IPOs led the way in the first quarter, accounting for more than half (24 out of 47) of middle-market issuances with more than twice the number of deals seen in the fourth quarter of 2013 (see Figure 2). CohnReznick observes that the healthcare industry’s success is, in part, due to that sector’s stocks trading well. Therefore, this uptick in investor demand presented an opportunity for other healthcare companies to go public. We expect that any continued broad market strength would see the rate of healthcare issuance continue apace. Any meaningful progress with Regulation A+ would also be a boon for healthcare finance, particularly for the small and mid-cap life sciences sector.
Figure 2. Healthcare IPOs Accounted for More Than Half of Middle-Market New Issues in the First Quarter
50 45 40
Commercial Real Estate Construction Financial Services Healthcare
Hospitality Industrial Life Sciences Manufacturing Energy
Professional Services Retail Technology/Telecom Transportation
35 30 25 20 15 10 5 0 Q1: 2013
Q2: 2013
Q3: 2013
Q4: 2013
Q1: 2014
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Analysis of Capital Formation in 2014 ―What Have We Discovered? “No one knows how long the window of opportunity for IPOs and follow-on transactions will remain open. In that regard, if you’re a middle-market decision maker and an IPO or follow-on is part of your strategic plan, the best strategy may be to prepare yourself for the transaaction and move forward when the timing is most advantageous.”
Figure 3. 75% of Middle-Market IPOs Priced At or Above the Initial Filing Range
― Mark Spelker, Partner, National Director of SEC Services
IPOs, executing nearly 75% of middle-market issues at or above the
100% 90% 80%
15.2% 42.9%
24.2%
16.1%
19.1%
70%
54.5%
60% 50% 40%
42.4%
51.6%
55.3%
35.7%
30% 20% 10%
21.4%
30.3%
33.3%
32.3%
Q3: 2013
Q4: 2013
25.5%
0% Q1: 2013
Q2: 2013
Below Filing Range
Within Filing Range
Q1: 2014 Above Filing Range
What About IPO Pricing? Investment banks generally did a commendable job in pricing original filing range (see Figure 3). While it was the best execution by investment banks since the first quarter of 2013, it still leaves one quarter of issuers disappointed in their IPO price. We believe that this under-pricing phenomenon can be dramatically reduced as more issuers take the lead in building relationships with investors early and not merely waiting for their bankers and the IPO roadshow. In fact, CohnReznick recommends that company management and their Boards of Directors, as fiduciaries, do everything possible to build those relationships, thereby increasing demand and creating leverage for more favorable pricing on middle-market transactions.
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Perspectives on Middle-Market Equity Capital ― May 2014
Middle-Market IPOs – How Did They Fare in the Aftermarket? IPOs traded well in the aftermarket in the first quarter, buoyed in part by the strength in the overall market (see Figure 4). While the results were modestly lower than the fourth quarter of 2013, we believe the demand for new and innovative companies remains strong, in addition to demand for IPOs as an asset class. What does this mean for middle-market businesses? CohnReznick believes it is another positive signal about the health of the equity market and points to the market’s support of innovation. This is particularly good news for industries like healthcare that are capital intensive and rely on equity investment to thrive. There is clear demand for high quality companies, particularly those in fields that are fostering innovation such as healthcare. Were it not for the market structure changes in the late 1990s, CohnReznick believes the market today would be experiencing significantly higher trading activity than we are currently seeing. We remain optimistic that the SEC will move forward in formally adopting the remaining titles of the JOBS Act and restore the markets to the vibrancy they once enjoyed.
Figure 4. Middle Market IPOs Traded Well in the Aftermarket in the First Quarter
50% 1 Day
2 Weeks
1 Week
1 Month
40%
30%
20%
10% Q1: 2013
Q2: 2013
Q3: 2013
Q4: 2013
Q1: 2014
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Analysis of Capital Formation in 2014 ―What Have We Discovered? “Middle-market companies naturally find it easier to invest in renewable energy projects when they have sufficient capital to do so. As the number of IPOs and follow-on transactions increase, the renewable energy space is likely to experience an uptick in overall business activity.” ― Anton Cohen, Partner, Renewable Energy Industry Practice Co-National Director
Figure 5. Healthcare Companies Also Dominated the Secondary Market for Sub $2 Billion Equity Issuance 120
100
Agribusiness Construction Energy Financial Services
Industrial Life Sciences Manufacturing Professional Services
Healthcare
Retail
Professional Services Retail Technology/Telecom Transportation
80
60
40
20
0 Q1: 2013
Q2: 2013
Q3: 2013
Q4: 2013
Q1: 2014
Were There Clear Industry Winners in Follow-On Offerings? CohnReznick also saw brisk activity in the secondary market in the first quarter, with 101 transactions by middle-market corporate issuers (see Figure 5). As with the IPO market, healthcare issues were prominent among follow-on offerings, accounting for 30% of all transactions. Issuers clearly took advantage of near record-highs in the market to raise additional capital in the quarter, and we could see similar levels of activity throughout the year with the backdrop of a favorable broad market. What do these results mean for the middle-market in general? The Q1 results for follow-on offerings are a sign that investors are willing to fund future growth, knowing that further funding may be required as investors appear optimistic about the market’s ability to support innovation and growth. Notably, we saw a significant increase in life sciences follow-ons, with 17 deals in the first quarter of 2014, compared to only three deals in the prior year’s period and 11 deals in the previous quarter. CohnReznick believes that raising capital through follow-on offerings is a strategic opportunity. Middle-market businesses may want to take advantage of escalating stock prices to sell more equity or provide shareholders with an opportunity to cash out. As illustrated in Figure 5, it was clear that follow-on equity deals got done.
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Perspectives on Middle-Market Equity Capital ― May 2014
Announcement Pricing―A Danger Zone One sobering issue does need to be addressed, however, and that is the consistently poor performance in the market price of stocks between the time that a deal is announced and the actual pricing (see Figure 6). 86% of middle-market follow-ons were priced below the last trade prior to the filing announcement. More alarmingly, 11% of these issues were priced worse than 20% off the last trade before filing. Not surprisingly, follow-on offerings traded well after pricing, recovering some of what they lost prior to the deal (see Figure 7)―a positive result for new investors on the transaction, but a far from ideal outcome for the issuer and its existing shareholders.
Figure 6. 86% of Middle-Market Follow-On Offerings Were Priced Below the Last Trade Before Filing 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Q1: 2013 Up more than 20%
Q2: 2013 Flat to up 20%
Q3: 2013
Down up to 20%
Q4: 2013 Down between 20% and 40%
Q1: 2014 Down over 40%
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Analysis of Capital Formation in 2014 ―What Have We Discovered? “The real estate industry benefits when middlemarket companies gain access to additional sources of capital like IPOs and follow-ons. There is a positive correlation between the level of activity in the capital markets and the level of activity in the real estate industry. Middlemarket companies who are successful in raising capital will invest in improving their facilities and adding locations, both of which drive transactions in real estate.” ― David Kessler, Partner, Commercial Real Estate Industry Practice National Director
Figure 7. Sub $2 Billion Follow-Ons Traded Well After Pricing, Regaining Ground Lost Since Filing 11% 10% 9%
1 Day
2 Weeks
1 Week
1 Month
8% 7% 6% 5% 4% 3% 2% Q1: 2013
Q2: 2013
Q3: 2013
Q4: 2013
Q1: 2014
One of the key reasons for such poor stock price performance leading up to a deal is the information leakage that occurs between the announcement of a deal and pricing. In recent years, we have seen fewer and fewer follow-on transactions become fully marketed, with more accelerated book-builds and overnight deals becoming commonplace. Even with the absence or severe restrictions in marketing, however, the evidence of information leakage is clear.
What does CohnReznick think? Issuers would be well-advised to improve their knowledge of their existing and potential shareholder bases, and their capacity to place new shares quickly and efficiently with a minimum of information leakage. CohnReznick believes that issuers who rely solely on their investment banks for this have been sorely disappointed―86% of them certainly. We would recommend that issuers leverage service providers that can help target institutions most efficiently, especially those institutions that “traditional Wall Street” may ignore. 14
Perspectives on Middle-Market Equity Capital ― May 2014
Preparing to Take Advantage of Equity Markets
With pro-equity capital formation legislation coming from Congress, indications the JOBS Act is fueling equity financing, and a positive outlook for the equity markets, now is an ideal time for middle-market companies looking for an equity infusion to ready their companies to go public. “Going public” isn’t for everyone, however. There is greater oversight and public scrutiny, pressure to achieve short-term results, and greater exposure to liabilities for officers and directors. These changes are significant, so CohnReznick advises companies looking at a future IPO to begin acting like a public company prior to filing. Doing so can help the organization avoid costly delays and increase the attractiveness of the company to underwriters and investors. While every company should develop a plan that is tailored for their organization to take advantage of the IPO On-Ramp, CohnReznick advises companies to consider the following initiatives as part of their planning:
Analyze and Update Your Board of Directors: As a public company, you’ll need to comply with tougher rules regarding the composition and responsibilities of your board and its committees. Although the JOBS Act provides for a longer transition to Sarbanes Oxley (SOX) compliance, eventually your audit, compensation, and nominating committees must be comprised of independent outside directors with at least one member of the audit committee being a “financial expert.” CohnReznick advises clients to begin evaluating current and desired board competencies. Board members experienced in public companies can be critical sources of insight in readying for an IPO.
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Preparing to Take Advantage of Equity Markets Evaluate and Strengthen Internal Controls: With the enactment of the JOBS Act, going public has fewer regulatory hurdles, including delaying compliance with Section 404(b) of Sarbanes Oxley. That does not mean, however, that you can afford to ignore internal controls as part of your preparation process. No one wants to be on a “road show” drumming up interest in an offering and not be able to answer questions about adequacy of controls. In May 2013, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released its 2013 Internal Control-Integrated Framework that provides an updated framework to help organizations design and implement internal controls and that clarifies the requirements for determining what constitutes effective internal control. Evaluate your company’s internal controls against this framework and have an action plan that demonstrates to underwriters that you will be prepared to withstand regulatory scrutiny and issue quarterly SEC filings (10-Q) that state that the company’s financial information is materially accurate and that its internal control over financial reporting and disclosure controls and procedures are adequate.
Get Audited Financial Statements: The SEC requires Public Company Accounting Oversight Board (PCAOB) audited financial statements prepared in accordance with U.S. generally accepted accounting principles (US – GAAP). You may be required to submit separate audited financial statements for acquired companies. Obtaining audited financial statements for previous years can be difficult and costly―especially if your documentation isn’t up-to-par―potentially delaying the IPO process.
Assess Your Management Team: The quality and depth of your management team is one of the most important factors for underwriters and investors. Senior executives should be experienced professionals who understand your industry and are prepared for the enhanced accountability, formality, and discipline associated with a public company. In particular, the organization’s CFO and other financial executives need to have the experience and training necessary to deal with public company accounting and financial systems.
Get Your House in Order: There are a variety of housekeeping issues you should address to prepare for an IPO. • Develop a public and investor relations program to tell your “story” to underwriters, potential investors, and shareholders, and to further enhance brand reputation and name recognition. • Review contracts, pending litigation, and third-party related transactions, and mitigate any issues that could disrupt the IPO process. • Revise compensation agreements, if necessary, to ensure they are fair and in-line with best practices and market expectations. • Review articles of incorporation, bylaws, stock ownership, and other corporate records to ensure public company suitability.
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Perspectives on Middle-Market Equity Capital ― May 2014
What’s Next?
Today, as was the case a few years ago, there is an overriding need for U.S. economic policy to grow the economy and create jobs. Legislators correctly concluded that the growth of middlemarket and entrepreneurial companies was being hampered by regulatory red-tape that made it cost prohibitive for many companies to access equity markets and secure needed capital. The JOBS Act was passed including IPO on-ramp provisions designed to make it easier for middle-market companies to secure growth capital. Our report shows initial evidence that the JOBS Act is beginning to make an impact in enhancing capital formation. CohnReznick’s analysis shows an increase in the number of IPO transactions, highlights participation by industry in those transactions, and demonstrates that middle-market IPOs traded well in the aftermarket during the first quarter of 2014. We caution, however, that the job of legislators and regulators is not finished. Small IPOs languished and will continue to do so until additional action is taken. We expect to see further pro-equity capital formation legislation from Congress and enactments by the U.S. Securities and Exchange Commission. We conclude that the window of opportunity for middle-market companies considering an IPO or follow-on transaction, now cracked open, will soon be opened wide enough to be a game changer for middle-market growth.
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Contributors and Upcoming Events Contributors to This Report CohnReznick has an agreement with IssuWorks, Inc. that enables CohnReznick to utilize their services and resources to assist clients with their capital needs. IssuWorks provides services and technologies that improve capital formation, distribution, and aftermarket results for companies, investors, and investment banks. The primary contributors from IssuWorks were: David Weild IV – IssuWorks Founder, Chairman, and Chief Executive Officer David has co-authored studies that document the long-term decline in equity capital formation and has testified in Congress and at the CFTC-SEC Joint Panel on Emerging Regulatory Issues. He is a former Vice-Chairman of NASDAQ and a frequent resource to the media on issues relevant to the capital markets. Edward H. Kim – IssuWorks Chief Operating Officer Ed has over 25 years of capital markets, finance, product development, and operations experience. He was formerly Managing Director of Financial Communications at Stern and Company, a Senior Vice President at NASDAQ, and the Chief Administrative Officer of a publicly held software company. CohnReznick has also formed a Capital Markets Advisory Consortium to provide clients and business associates with direct access to a group of boutique investment bankers across the United States who are known for their market knowledge and specific industry expertise.
CohnReznick’s Fourth Annual Liquidity and Capital Raising National Forum CohnReznick is committed to providing the owners/operators of middle-market companies with critical insights on liquidity and capital formation. We are pleased to announce that our Fourth Annual Liquidity and Capital Raising National Forum will take place in five cities this Fall to better accommodate an expanding group of attendees. BOSTON OCT.
24
Mandarin Oriental
NEW YORK SEPT.
23
St. Regis
BALTIMORE NOV.
05
LOS ANGELES NOV.
20
Four Seasons
Four Seasons
ATLANTA OCT.
30
Ritz-Carlton Buckhead
Designed for the key decision makers―CEOs, CFOs, and Presidents―this event offers an outstanding networking venue that enables attendees to connect, exchange ideas, and develop relationships. Some of the country’s top M&A and capital markets experts and CEOs will be on hand to share their insights, advice, and experiences. We hope you can join us for this not-to-be-missed forum. Registration opens this summer at www.cohnreznick.com.
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Perspectives on Middle-Market Equity Capital ― May 2014
Appendix Number of IPOs By Investment Bank
Q1: 2013 Q2: 2013 Q3: 2013 Q4: 2013 Q1: 2014
Credit Suisse 3 15 4 6 JP Morgan 3 9 8 10 Stifel Nicolaus/Keefe 2 6 2 4 Jefferies 5 7 3 Barclays Capital 3 3 7 6 Citigroup Global Markets 2 6 8 4 Bank of America Merrill Lynch 2 5 5 13 Morgan Stanley 6 4 7 Cowen 3 2 1 Goldman Sachs 3 6 7 4 BMO Capital Markets 1 1 2 1 Deutsche Bank Securities 4 2 8 6 Piper Jaffray 1 2 4 4 RBC Capital Markets 1 5 UBS Securities 2 3 2 2 Wells Fargo Securities 1 1 2 2 Leerink Swann 1 4 3 4 JMP Securities 1 1 Oppenheimer 1 1 2 Raymond James 1 2 1 William Blair 2 1 1 Aegis Capital Corp Maxim Group Sandler O’Neill 3 1 Wedbush PacGrow Life Sciences Bryan Garnier 1 Clarkson Capital Markets 1 Evercore Partners 1 FBR Capital Markets 2 2 Guggenheim Securities 2 Lazard Capital Markets 1 Macquarie Capital 1 Needham & Company 1 1 Pacific Crest Securities 1 Robert W Baird 1 2 1 2 Societe Generale 1 Stephens 1 VTB Capital 1 Zelman Partners 1
10 10 10 8 7 7 6 6 5 5 4 4 4 4 4 4 3 2 2 2 2 1 1 1 1
Sorted by volume of IPOs in Q1: 2014
A CohnReznick Report
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Middle Market IPOs in Q1: 2014
20
ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
Continental Building Products Inc
189,416,500
Construction
“Citigroup Global Markets Inc; Credit Suisse Securities (USA) LLC; Barclays Capital Inc; Deutsche Bank Securities Inc; RBC Capital Markets”
New Home Company Inc
98,828,125
Construction
“Citigroup Global Markets Inc; JP Morgan Securities LLC; Credit Suisse Securities (USA) LLC”
Installed Building Products Inc
94,242,500
Construction
“Deutsche Bank Securities Inc; UBS Securities LLC”
Talmer Bancorp Inc
232,555,544
Financial Services
“Keefe, Bruyette & Woods, a Stifel Company.; JP Morgan Securities LLC”
Square 1 Financial Inc
119,669,274
Financial Services
“Sandler O’Neill & Partners; Keefe, Bruyette & Woods, a Stifel Company.”
CM Finance Inc
114,999,990
Financial Services
“Raymond James & Associates Inc; Keefe, Bruyette & Woods, a Stifel Company.; Oppenheimer & Co Inc”
TPG Specialty Lending Inc
112,000,000
Financial Services
“JP Morgan Securities LLC; Bank of America Merrill Lynch; Goldman Sachs; Citigroup Global Markets Inc; Wells Fargo Securities LLC; Barclays Capital Inc”
Versartis Inc
144,900,000
Healthcare
“Morgan Stanley & Co LLC; Citigroup Global Markets Inc”
Ultragenyx Pharmaceutical Inc
139,112,883
Healthcare
“JP Morgan Securities LLC; Morgan Stanley & Co LLC”
Perspectives on Middle-Market Equity Capital ― May 2014
Middle Market IPOs in Q1: 2014 (continued) ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
Akebia Therapeutics Inc
114,954,000
Healthcare
“Morgan Stanley & Co LLC; Credit Suisse Securities (USA) LLC; UBS Securities LLC”
Revance Therapeutics Inc Dicerna Pharmaceuticals Inc Auspex Pharmaceuticals Inc Concert Pharmaceuticals Inc UniQure BV
110,400,000
Healthcare
“Cowen & Co LLC; Piper Jaffray & Co”
103,500,000
Healthcare
“Jefferies LLC; Leerink Swann LLC; Stifel Nicolaus & Co Inc”
96,600,000
Healthcare
“Stifel Nicolaus & Co Inc; BMO Capital Markets”
93,095,660
Healthcare
“UBS Securities LLC; Wells Fargo Securities LLC”
91,800,000
Healthcare
“Jefferies LLC; Leerink Swann LLC”
Lumenis Ltd
84,232,224
Healthcare
“Goldman Sachs; Credit Suisse Securities (USA) LLC; Jefferies LLC”
Achaogen Inc
82,800,000
Healthcare
“Credit Suisse Securities (USA) LLC; Cowen & Co LLC”
MediWound Ltd
80,500,000
Healthcare
“Credit Suisse Securities (USA) LLC; Jefferies LLC; BMO Capital Markets”
Flexion Therapeutics Inc
74,750,000
Healthcare
“BMO Capital Markets; Wells Fargo Securities LLC”
Inogen Inc Trevena Inc
70,588,208
Healthcare
JP Morgan Securities LLC
66,643,143
Healthcare
“Barclays Capital Inc; Jefferies LLC”
Genocea Biosciences Inc
66,000,000
Healthcare
“Citigroup Global Markets Inc; Cowen & Co LLC”
Cara Therapeutics Inc Egalet Corp
63,250,000
Healthcare
“Stifel Nicolaus & Co Inc; Piper Jaffray & Co”
57,960,000
Healthcare
“Stifel Nicolaus & Co Inc; JMP Securities LLC”
Aquinox Pharmaceuticals Inc
53,130,000
Healthcare
“Jefferies LLC; Cowen & Co LLC”
A CohnReznick Report
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Middle Market IPOs in Q1: 2014 (continued)
22
ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
Eagle Pharmaceuticals Inc Celladon Corp Argos Therapeutics Inc
51,750,000
Healthcare
“Piper Jaffray & Co; William Blair & Co LLC”
50,600,000
Healthcare
Barclays Capital Inc
49,829,800
Healthcare
“Piper Jaffray & Co; Stifel Nicolaus & Co Inc; JMP Securities LLC”
Galmed Pharmaceuticals Ltd Dipexium Pharmaceuticals NephroGenex Inc Intrawest Resorts Holdings Inc
44,050,635
Healthcare
Maxim Group LLC
37,950,000
Healthcare
Oppenheimer & Co Inc
37,200,000
Healthcare
Aegis Capital Corp
215,625,000
Hospitality
“Goldman Sachs; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc; Bank of America Merrill Lynch”
GlycoMimetics Inc Applied Genetic Technologies Corp Eleven Biotherapeutics Inc
64,400,000
Life Sciences
“Jefferies LLC; Barclays Capital Inc”
57,500,004
Life Sciences
“BMO Capital Markets; Wedbush PacGrow Life Sciences”
57,500,000
Life Sciences
“Citigroup Global Markets Inc; Cowen & Co LLC; Leerink Swann LLC”
2U Inc
119,275,000
Professional Services
“Goldman Sachs; Credit Suisse Securities (USA) LLC”
Care.com Inc
104,592,500
Professional Services
“Morgan Stanley & Co LLC; Bank of America Merrill Lynch; JP Morgan Securities LLC”
Everyday Health Inc
100,100,000
Professional Services
“JP Morgan Securities LLC; Credit Suisse Securities (USA) LLC; Citigroup Global Markets Inc”
A10 Networks Inc
187,500,000
Technology/Telecom
“Morgan Stanley & Co LLC; Bank of America Merrill Lynch; JP Morgan Securities LLC; RBC Capital Markets”
Perspectives on Middle-Market Equity Capital ― May 2014
Middle Market IPOs in Q1: 2014 (continued) ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
Paylocity Holding 137,729,750 Corp
Technology/Telecom
“Deutsche Bank Securities Inc; Bank of America Merrill Lynch; William Blair & Co LLC”
Varonis Systems Inc
121,440,000
Technology/Telecom
“Morgan Stanley & Co LLC; Barclays Capital Inc; Jefferies LLC; RBC Capital Markets”
Q2 Holdings Inc
116,025,013
Technology/Telecom
“JP Morgan Securities LLC; Stifel Nicolaus & Co Inc”
Amber Road Inc Borderfree Inc
110,503,887
Technology/Telecom
Stifel Nicolaus & Co Inc
92,000,000
Technology/Telecom
“Credit Suisse Securities (USA) LLC; RBC Capital Markets”
Aerohive Networks Inc
75,000,000
Technology/Telecom
“Goldman Sachs; Bank of America Merrill Lynch”
CHC Group Ltd
310,000,000
Transportation
“JP Morgan Securities LLC; Barclays Capital Inc; UBS Securities LLC”
Malibu Boats Inc
112,589,540
Transportation
“Raymond James & Associates Inc; Wells Fargo Securities LLC”
Stock Building Supply Holdings Inc
124,237,425
Construction
“Goldman Sachs; Barclays Capital Inc; Citigroup Global Markets Inc”
William Lyon Homes Inc
62,675,000
Construction
“JP Morgan Securities LLC; Citigroup Global Markets Inc; Credit Suisse Securities (USA) LLC”
GeoPark Ltd
97,997,900
Energy
“JP Morgan Securities LLC; BTG Pactual; Itau BBA USA Securities Inc”
American Eagle Energy Corp Synthesis Energy Systems Inc Waterstone Financial Inc MoneyGram International Inc
83,490,000
Energy
Johnson Rice & Co
15,000,001
Energy
TR Winston & Co Inc
253,000,000
Financial Services
Sandler O’Neill & Partners
151,800,000
Financial Services
“Bank of America Merrill Lynch; Wells Fargo Securities LLC; Goldman Sachs; JP Morgan Securities LLC”
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Middle Market Follow-On Offerings in Q1: 2014 ISSUER
24
PROCEEDS INDUSTRY
BOOKRUNNERS
100,815,000 PennyMac Financial Services Inc 83,912,500 Arlington Asset Investment Corp
Financial Services
Citigroup Global Markets Inc
Financial Services
"Barclays Capital Inc; Credit Suisse Securities (USA) LLC; RBC Capital Markets"
Enzymotec Ltd
151,303,180
Healthcare
"Bank of America Merrill Lynch; Jefferies LLC"
Epizyme Inc
151,122,465
Healthcare
"Citigroup Global Markets Inc; Cowen & Co LLC; Leerink Partners LLC"
Aratana Therapeutics Inc
142,025,000
Healthcare
“Jefferies LLC; Barclays Capital Inc; William Blair & Co LLC”
Receptos Inc
117,403,500
Healthcare
“Credit Suisse Securities (USA) LLC; Leerink Swann LLC; BMO Capital Markets”
Endocyte Inc
108,675,000
Healthcare
“Credit Suisse Securities (USA) LLC; Citigroup Global Markets Inc”
Flamel Technologies SA GW Pharmaceuticals plc Tornier NV
105,300,000
Healthcare
JMP Securities LLC
101,061,900
Healthcare
“Morgan Stanley & Co LLC; Cowen & Co LLC”
98,656,250
Healthcare
Bank of America Merrill Lynch
AtriCure Inc Derma Sciences Inc Ampio Pharmaceuticals Inc Inovio Pharmaceuticals Inc NanoString Technologies Inc
94,084,375
Healthcare
Piper Jaffray & Co
86,250,000
Healthcare
“Piper Jaffray & Co; Canaccord Genuity Inc”
68,425,000
Healthcare
“Citigroup Global Markets Inc; Jefferies LLC”
63,251,610
Healthcare
“Piper Jaffray & Co; Stifel Nicolaus & Co Inc”
61,399,983
Healthcare
“JP Morgan Securities LLC; Morgan Stanley & Co LLC”
Tekmira Pharmaceuticals Corp
60,562,500
Healthcare
Leerink Partners LLC
Perspectives on Middle-Market Equity Capital ― May 2014
Middle Market Follow-On Offerings in Q1: 2014 (continued) ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
OvaScience Inc ANI Pharmaceuticals Inc Tonix Pharmaceuticals Holding Corp Sunesis Pharmaceuticals Inc Progenics Pharmaceuticals Inc Idera Pharmaceuticals Inc Alimera Sciences Inc Omeros Corp Cytokinetics Inc iCAD Inc Neptune Technologies & Bioressources Inc Biota Pharmaceuticals Inc Cardiome Pharma Corp Rexahn Pharmaceuticals Inc TG Therapeutics Inc BioLife Solutions Inc IsoRay Inc Primero Mining Corp
55,186,300
Healthcare
Leerink Partners LLC
49,999,993
Healthcare
“Oppenheimer & Co Inc; Roth Capital Partners”
43,478,250
Healthcare
Roth Capital Partners
43,012,500
Healthcare
"Cowen & Co LLC; Cantor Fitzgerald & Co"
40,250,000
Healthcare
Jefferies LLC
40,104,752
Healthcare
"Piper Jaffray & Co; Cowen & Co LLC"
37,500,000
Healthcare
Cowen & Co LLC
35,000,009
Healthcare
Cowen & Co LLC
35,000,000
Healthcare
Cowen & Co LLC
30,360,000
Healthcare
Craig-Hallum Group
28,750,000
Healthcare
"Roth Capital Partners; Euro Pacific Canada Inc"
28,749,736
Healthcare
Guggenheim Securities LLC
27,377,259
Healthcare
Canaccord Genuity Corp
20,002,500
Healthcare
Roth Capital Partners
18,135,848
Healthcare
Ladenburg Thalmann & Co Inc
15,480,000
Healthcare
Ladenburg Thalmann & Co Inc
14,675,180
Healthcare
Maxim Group LLC
202,280,519
Industrial
Canaccord Genuity Corp
A CohnReznick Report
25
Middle Market Follow-On Offerings in Q1: 2014 (continued)
26
ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
Solazyme Inc
63,250,000
Industrial
“Goldman Sachs; Morgan Stanley & Co LLC”
Noranda Aluminum Holding Corp SilverCrest Mines Inc United Insurance Holdings Corp
47,500,000
Industrial
Morgan Stanley & Co LLC
18,269,757
Industrial
Dundee Securities Ltd
57,500,000
Insurance
"Raymond James; Wells Fargo Securities LLC"
PTC Therapeutics Inc
126,499,993
Life Sciences
"JP Morgan Securities LLC; Credit Suisse Securities (USA) LLC"
Arrowhead Research Corp
119,858,750
Life Sciences
"Jefferies LLC; Barclays Capital Inc; Deutsche Bank Securities Inc"
Intra-Cellular Therapies Inc Geron Corp
107,485,000
Life Sciences
"Leerink Partners LLC; Cowen & Co LLC"
103,500,000
Life Sciences
Bank of America Merrill Lynch
CytRx Corp XenoPort Inc
85,962,500
Life Sciences
Jefferies LLC
82,800,000
Life Sciences
Credit Suisse Securities (USA) LLC
Prothena Corp plc
82,738,578
Life Sciences
"Bank of America Merrill Lynch; Citigroup Global Markets Inc"
Compugen Ltd Agenus Inc Ignyta Inc Oxygen Biotherapeutics Inc Five Prime Therapeutics Inc
72,450,000
Life Sciences
Jefferies LLC
60,037,200
Life Sciences
William Blair & Co LLC
55,190,513
Life Sciences
Leerink Partners LLC
51,999,993
Life Sciences
"Ladenburg Thalmann & Co Inc; MTS Securities LLC"
43,125,000
Life Sciences
"Jefferies LLC; BMO Capital Markets; Wells Fargo Securities LLC"
Retrophin Inc Athersys Inc
39,999,997
Life Sciences
Jefferies LLC
20,500,000
Life Sciences
Maxim Group LLC
Perspectives on Middle-Market Equity Capital ― May 2014
Middle Market Follow-On Offerings in Q1: 2014 (continued) ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
Bio-Path Holdings Inc pSivida Corp Mercer International Quantum Fuel Systems Technologies Worldwide Inc Kandi Technologies Group Inc MakeMyTrip Ltd
9,999,999
Life Sciences
Maxim Group LLC
6,987,000
Life Sciences
Northland Securities Inc
57,557,500
Manufacturing
Credit Suisse Securities (USA) LLC
16,620,375
Manufacturing
Craig-Hallum Capital Group
11,053,440
Manufacturing
FT Global Capital Inc
145,475,000
Professional Services
"Citigroup Global Markets Inc; JPMorgan; Deutsche Bank Securities Inc"
China Distance Education Holdings Ltd
84,000,000
Professional Services
"Morgan Stanley & Co LLC; Credit Suisse Securities (USA) LLC"
Marchex Inc
59,997,000
Professional Services
"Deutsche Bank Securities Inc; RBC Capital Markets; Piper Jaffray & Co"
NanoViricides Inc 20,000,001
Professional Services
"Chardan Capital Markets LLC; Midtown Partners & Co LLC"
Roundy's Inc
71,196,923
Retail
"Credit Suisse Securities (USA) LLC; JP Morgan Securities LLC; Bank of America Merrill Lynch; BMO Capital Markets"
American Apparel Inc Sonus Networks Inc Montage Technology Group Ltd
30,500,000
Retail
Roth Capital Partners
145,525,680
Technology/Telecom
Goldman Sachs
129,202,500
Technology/Telecom
"Deutsche Bank Securities Inc; Barclays Capital Inc; Stifel Nicolaus & Co Inc"
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Middle Market Follow-On Offerings in Q1: 2014 (continued) ISSUER
28
PROCEEDS INDUSTRY
BOOKRUNNERS
E2open Inc
116,513,925
Technology/Telecom
"Bank of America Merrill Lynch; Pacific Crest Securities LLC"
Applied Optoelectronics Inc China Mobile Games & Entertainment Group Ltd
83,662,500
Technology/Telecom
"Raymond James & Associates Inc; Piper Jaffray & Co"
82,608,000
Technology/Telecom
"Credit Suisse Securities (USA) LLC; Barclays Capital Inc; Jefferies LLC; Nomura Securities International Inc"
SciQuest Inc
80,250,000
Technology/Telecom
"JP Morgan Securities LLC; Stifel Nicolaus & Co Inc"
Magic Software Enterprises Ltd Datawatch Corp
58,650,000
Technology/Telecom
"Barclays Capital Inc; William Blair & Co LLC"
57,520,125
Technology/Telecom
"Canaccord Genuity Inc; William Blair & Co LLC"
Orbcomm Inc
38,898,750
Technology/Telecom
Raymond James & Associates Inc
Rubicon Technology Inc Mattson Technology Inc
37,375,000
Technology/Telecom
Canaccord Genuity Inc
34,500,288
Technology/Telecom
"Needham & Company LLC; Cowen & Co LLC"
AudioCodes Ltd
32,200,000
Technology/Telecom
"William Blair & Co LLC; Needham & Company LLC"
Cinedigm Digital Cinema Corp FuelCell Energy Inc Plug Power Inc Rubicon Technology Inc Plug Power Inc Mandalay Digital Group Inc RadiSys Corp
31,671,000
Technology/Telecom
Piper Jaffray & Co
31,625,000
Technology/Telecom
Stifel Nicolaus & Co Inc
30,000,000
Technology/Telecom
Cowen & Co LLC
28,222,500
Technology/Telecom
Canaccord Genuity Inc
22,400,006
Technology/Telecom
Cowen & Co LLC
20,015,175
Technology/Telecom
Ladenburg Thalmann & Co Inc
19,380,000
Technology/Telecom
Needham & Company LLC
SciQuest Inc
16,813,281
Technology/Telecom
UBS Securities LLC
Perspectives on Middle-Market Equity Capital ― May 2014
Middle Market Follow-On Offerings in Q1: 2014 (continued) ISSUER
PROCEEDS INDUSTRY
BOOKRUNNERS
WidePoint Corp DHT Holdings Inc
12,500,001
Technology/Telecom
B Riley & Co Inc
227,250,000
Transportation
"RS Platou Markets AS; DnB Markets"
Ardmore Shipping 108,675,000 Corp
Transportation
"Morgan Stanley & Co LLC; Wells Fargo Securities LLC; Clarkson Capital Markets"
Tsakos Energy Navigation Ltd
86,416,750
Transportation
"Morgan Stanley & Co LLC; UBS Securities LLC; Wells Fargo Securities LLC"
Navios Maritime Acquisition Corp
57,557,500
Transportation
"Citigroup Global Markets Inc; RS Platou Markets AS; Deutsche Bank Securities Inc"
Paragon Shipping 42,406,250 Inc 32,999,998 StealthGas Inc
Transportation
Jefferies LLC
Transportation
Global Hunter Securities LLC
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29
About CohnReznick’s Capital Markets Group Utilizing comprehensive resources and deep industry expertise, the professionals of CohnReznick’s Capital Markets Group understand the goals of both middle-market companies and investors to deliver timely and appropriate solutions and opinions. We understand the challenges and opportunities of the Capital Markets and possess the forward thinking technical skills and experience necessary to address the needs of clients, investment bankers, investment advisors, attorneys, lenders, investors, managements, audit committees, and the U.S. Securities and Exchange Commission and other regulatory authorities. • • • • • • • • • •
Mark Spelker, CPA, Partner, National Director of SEC Services Steven Schenkel, CPA, Partner, Chief Risk Officer Dom Esposito, CPA, Partner, National Practice and Growth Director George Gallinger, Principal, CohnReznick Advisory Group − Governance, Risk, and Compliance National Director Jeremy Swan, Principal, CohnReznick Advisory Group Alex Castelli, CPA, Partner, Technology and Life Sciences Industry Practice Leader David Kessler, CPA, Partner, Commercial Real Estate Industry Practice National Director Tim Kemper, CPA, Regional Managing Partner-South/Central, Renewable Energy Industry Practice Co-National Director Anton Cohen, CPA, Partner, Renewable Energy Industry Practice Co-National Director Richard Schurig, CPA, Partner, Retail and Consumer Products Industry Practice Leader
CohnReznick’s Capital Market Group provides a range of relevant capabilities including: • Auditor of Record: The professionals at CohnReznick’s Capital Markets Group provide knowledge and valued assurance services to CEOs, CFOs, and audit committees for privately held companies seeking an auditor of record for an anticipated public filing, mid-sized publicly held companies seeking a change from their existing auditor of record, and privately held companies seeking assistance in preparing for a capital market event. • IPO Readiness Assessment: Our readiness assessment will determine where a company is now, where it needs to be to position itself for a successful IPO, and what it will take to get there. • Corporate Governance Services: Having helped hundreds of pre- and post-IPO companies comply with the demands of SOX and exchange requirements, we understand the ROI of proper planning. • CFO Services: We assist busy CFOs and CAOs by providing strategic, operational, financial, and accounting support, adding value to their core financial operations. • Information Technology Services: Our IT Governance and Security and IT Infrastructure Design and Implementation teams work seamlessly to assess, design, recommend, and implement systems.
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Perspectives on Middle-Market Equity Capital ― May 2014
CohnReznick Advantage for Capital Markets Industry Insights, Optimized Solutions • Partners immersed in supporting public companies and capital markets transactions who understand your business drivers. • Support from industry specialists to offer comprehensive industry-specific solutions and insights. • Engagement teams utilize the Firm’s broad resources to provide innovative solutions and breakthrough ideas. Transformative Advice • Timely, relevant views about critical economic, business, legislative, tax, and global news and emerging trends in the Capital Markets. • Thought leadership reports, alerts, conferences, and events delivered in the context of what these issues mean to public companies, companies considering a public filing, the Capital Markets and your business. Responsive Culture • Our partners are empowered and entrepreneurial decision makers. • They draw on our depth of knowledge and expertise to provide faster, smarter, more efficient service. Capital Markets Dexterity • Preparation, valuation, structuring, and facilitation of Capital Markets transactions, and introductions to capital sources. • Assistance with acquisitions, identification/dispositions, liquidity events, and other capital-raising needs. Proactive, Resourceful Service • A true partner-led service model ensures direct access and active partner management. • Accountability and expectations are developed to meet your needs and documented in the CohnReznick Client Service Plan. National and Global Reach • With 26 offices, we seamlessly and cost-efficiently serve clients on a regional, national, and international basis. • Companies with international interests in 100+ countries are served through our membership in Nexia International, a global network of independent accountancy, tax, and business advisors.
About CohnReznick LLP With origins dating back to 1919, CohnReznick LLP is the 10th largest accounting, tax, and advisory firm in the United States, combining the resources and technical expertise of a national firm with the hands-on, entrepreneurial approach that today’s dynamic business environment demands. CohnReznick serves a large number of diverse industries and offers specialized services for Fortune 1000 companies, owner-managed firms, international enterprises, government agencies, not-for-profit organizations, and other key market sectors. Headquartered in New York, NY, CohnReznick serves its clients with more than 280 partners, 2,500 employees, and 26 offices. The Firm is a member of Nexia International, a global network of independent accountancy, tax, and business advisors.
A CohnReznick Report
31
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