Where are the opportunities in the U.S. IPO market as we move further into 2020—and continue to navigate the COVID-19 crisis? While the active IPO market ground to a halt after February due to COVID-19, April saw the beginnings of a reopening. In the latest edition of our study, Going Public: The U.S. IPO Report, we examine 10 IPOs with base deal sizes over $75 million that priced in Q1 2020 to uncover the developments that prospective issuers, sponsors, investment banks and investors need to keep top of mind as they continue to prepare for opportune market windows.
Top Trends to Follow
Based on our analysis, we see several overarching trends shaping the IPO outlook, including:
- Smaller IPOs continued to dominate the market, while lifesciences and biotech IPOs dominated by deal count.
- While the SEC comment process remains streamlined, time to market has increased by over a month.
- None of the IPOs in our study had a secondary component, and none involved insider purchases, but half had directed share programs.
- Q1 2020 saw more deals pricing below the midpoint than in both Q1 2019 and full year 2019.
- Two years of financial information remains the new normal—particularly for life sciences and biotech IPOs.
- Despite some trends in Q4 2019 towards IPO issuers that were profitable, IPO issuers in Q1 largely were unprofitable, led by life sciences and biotech IPOs.
- April’s IPO market showed signs of life, with a number of life sciences, biotech and SPAC IPOs completing their offerings—and we expect the IPO market to open up a bit more broadly in H2 2020.
- Issuers have a view towards optionality if market windows open in H2 2020, and others who have not formally kicked off may delay preparations to hit the market in H1 2021.
- The IPO preparation and marketing process will look a bit different, but should not be a barrier to IPO success.
- COVID-19 will be an increased focus of disclosure and marketing, and perhaps part of non-GAAP financial measures.