The Wall Street Journal recently covered the results of Fenwick & West’s inaugural IPO Survey in the article, “It’s Hard Work Taking Tech Companies Public.”
The survey, “Key Metrics for Recent Technology and Life Science Initial Public Offerings,” examined U.S. technology and life sciences companies that went public in 2011 and 2012. Authored by Fenwick partners Daniel Winnike and Jeffrey Vetter, the study found that fewer than a third of the deals debuted within the initial price range proposed by the companies. More than 47% of the deals priced above their range, and 24% priced below their range.
“Pricing feels like more art than science,” said Vetter, co-chair of the firm’s Securities and Corporate Finance practice.
The survey also noted that deals are trending toward bigger sizes and that the expiration of lock-ups on pre-IPO investors had sharp impacts on share prices.
“Almost across the board, your stock starts trailing off [as the lock-ups end],” noted Vetter. He added that while some companies have given early lock-up release for executives or venture-capital investors in the form of secondary offerings to relieve some of that pressure, that it was an option available mostly only to companies whose shares were trading above their IPO price.
The IPO Survey is the first in a series that will provide quarterly reviews of IPOs in the technology and life sciences sectors nationwide. Read more about Fenwick’s Technology & Life Sciences IPO Survey.