WEST PALM BEACH, Fla., Oct. 5, 2020 /PRNewswire/ — Apparently, the IPO market is immune from the current pandemic. The capital markets maintain their appetite for public offerings and IPO dealmakers have caught another break; the once grueling road show has gone virtual.
The old horse-and-buggy road show involved an intense travel schedule, logistics issues and rather costly displays. The new virtual road show can be set up in less than half the time and for a fraction of the cost.
One particular point of interest is that IPO’s that have been completed since March 2020, have all priced their deals at the midpoint or higher of their ranges. The nearly absolute elimination of face-to-face presentations has not impacted deal pricing.
The popular consensus is that the way we do business has changed forever. A more accurate assessment is that the way we do business has evolved into a platform that is more efficient. People, particularly entrepreneurs, possess the ability to adapt to new business climates very quickly. In the 1970’s and early 1980’s, corporate espionage became a mainstream enemy. From the late 1980’s into the mid 1990’s, AIDS was the invisible, silent assassin that lurked in the dark recesses of everyone’s minds. Once the Y2K panic passed, terrorism in one form or another became the new bad guy.
Today, germs are the enemy. It’s redundant to say that COVID has impacted nearly every last aspect of the way we live and work, but it must be remembered that Hantavirus, SARS, Zika virus and life-threatening staph infections all lashed out at the population over the past decade.
What’s different now if that nearly everyone knows someone who’s been infected with COVID; it’s more real. A bout with COVID doesn’t always manifest as just a few days out of the office. A two-week quarantine can be followed by another month of bed rest and a slow recuperation.
The perfect storm of microbes has been met head on by a perfect storm of advanced tech that permits us to continue on course without losing a step. It is astonishing how quickly dealmakers and key professionals have come to rely on Zoom and other similar platforms. Avatars, holographic imagery and all other forms of AR/VR are more than essential; they are now commonplace.
The pervasive change to IPO road shows is accompanied by new, more complex, painstakingly drafted registration statements and prospectus. Federal regulators and the marketplace expect in-depth discussions that extrapolate on the current and anticipated effects of COVID on businesses heading down the IPO road. Updates regarding the potential impact of COVID on the soon-to-be-public company are also required.
The risk factors that must be disclosed are generally much more robust, and now include drill-downs on an array of potential issues from debt management to human resource uncertainties.
The dealmakers have abandoned their oak desks and high-rise offices and settled into to virtual helms at remote workspaces, registration statements and risk disclosures have become even more complex, yet the markets continue their upward trajectory.
Tech and pharma IPO’s are not just unabated; their frequency has increased when compared to other mid-summer years, especially election years. A very solid argument can be made that this dynamic indicates that domestic markets are stronger than ever, even while being saddled with the current pandemic.
The country has experienced a steep quarterly plunge in economic activity in the second quarter, but tech and pharma stocks are trading at historical premiums, pushing domestic indexes even higher. Some industry experts predict there will be at least 15 venture-backed tech IPO’s before the end of the year. Analysts and venture firms that focus on big-board IPO’s share a predominantly positive outlook.
The most interesting element of this continued IPO optimism is that the small and lower middle market deals are busier than ever with numerous IPO’s, a record-setting number of SPAC deals, and a non-stop string of follow-on offerings.
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Attorney Laura Anthony
Laura Anthony, Esq. is the founding partner of Anthony, L.G., PLLC, a national corporate, securities and business transactions law firm. For more than two decades Ms. Anthony has focused her law practice on small and mid-cap private and public companies, capital markets, NASDAQ, NYSE American, the OTC markets, going public transactions, mergers and acquisitions, registered public and exempt private offerings and corporate finance transactions, Regulation A/A+, securities token offerings, Exchange Act and other regulatory reporting requirements, FINRA requirements, state and federal securities laws, general corporate law and complex business transactions. The Anthony, L.G. PLLC team has represented issuers, buyers, sellers, underwriters, placement agents, investors, and shareholders in mergers, acquisitions and corporate finance transactions valued in excess of $1 billion. ALG has represented in excess of 200 companies in reverse merger, initial public offering and direct public offering transactions. Palm Beach Attorney Laura Anthony is also the creator and author of SecuritiesLawBlog.com, the host of LawCast™, Corporate Finance in Focus and a contributor to The Huffington Post and Law360.
SOURCE Anthony, L.G., PLLC