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© Capital Markets Advisory Partners, LLC
David Weild 212.542.9979 david.weild@cmapartners.com
The IPO Crisis And What We’re Doing To Fix It: Market structure is too low cost to pay for the infrastructure needed to support capital formation. Improved strategies are needed. We offer some.
ISEEE Orlando, FL March 25, 2012
© Capital Markets Advisory Partners, LLC 2
Our Focus
• Change Agent (Supported by Grant Thornton) – Studies
• Why are IPOs in the ICU? • A wake up call for America • Market structure is causing the IPO crisis – and more • Killing the stock market that laid the golden eggs (pending chapter in “Broken
Markets” to be published by John Wiley & Sons)
– Citations & Testimony • Congress, Senate, SEC • IPO Task Force Report to the US Treasury • Jeffrey Immelt led Jobs Council Report to the White House
• Improving Deal Results for Issuers (Capital Markets Advisory Partners)
• IPOs • Follow-on offerings • Convertible offerings
© Capital Markets Advisory Partners, LLC 3
The small IPO market collapsed with the OHRs and Reg. ATS (loss of B/D incentives) As seen in the study "Market structure is causing the IPO crisis—and more"
Sources: Grant Thornton LLP, Capital Markets Advisory Partners and Dealogic Data includes corporate IPOs as of 6/30/11, excluding funds, REITs, SPACs and LPs
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD
Transactions raising less than $50 million
Transactions raising at least $50 million
Percent of total U.S. IPOs
Sarbanes-Oxley (2002)
OHRs (1997)
Manning Rule (1996)Allegations of Spread Fixing (1994)
Regulation ATS (1998)
Decimalization (2001)
Reg. NMS (2005)
© Capital Markets Advisory Partners, LLC
*March 16, 2011; House Financial Services Committee “Hearing on Legislative Proposals to Promote Job Growth, Capital Formation and Market Certainty”
statement by David Weild
4
A catastrophic fall in the number of listed companies (43%) As seen in the study "A wake up call for America"*
(100)
(50)
0
50
100
150
200
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD
Inde
xed
valu
e of
sel
ecte
d gl
obal
exc
hang
e lis
tings
(1
997
= 0)
China
Australia
Germany
Tokyo
London Toronto
United States
Hong Kong
Sources: Grant Thornton LLP, Capital Markets Advisory Partners, World Federation of Exchanges and individual stock exchanges
© Capital Markets Advisory Partners, LLC
© Capital Markets Advisory Partners, LLC
• H.R. 1070 (Reg. A) • H.R. 1965 (banks; 500-2,000 shareholders) • H.R. 2940 (general solicitation, Reg. D) • H.R. 2930 (crowdfunding) • H.R. 2167 (500-1,000 shareholders)
Disclosure Standards
Current legislation will help but won’t do nearly enough to fix our stock markets.
• H.R. 1070 (Reg. A) • H.R. 2930 (crowdfunding)
Private Public
Private Public
Private Public
© Capital Markets Advisory Partners, LLC
New Segments 1. Emerging Growth Company
(IPO) 1. >$1 billion in revenue 2. 5 year window 3. SOX 404(b) exempt . 4. 2 years of audits (down from 3) 5. Eases research rules 6. Eases communications rules 7. Confidential submission
2. Reg. A (IPO) 1. Up to $50 million 2. Audit requirement 3. Study pre-emption of state regulation
3. Crowd Funding (private) 1. Up to $1 million w/out audit, $2 million
with.
General Impact 1. “Tick” size (decimalization)
study 1. Impact on IPO market 2. Impact on liquidity (small companies) 3. SEC may designate higher ‘tick’ sizes
2. Reg. S-K study 1. Reduce costs and burdens of
registration for Emerging Growth C ompanies
3. General solicitation permitted 1. Reg. D
1. Takes # of permitted shareholders up dramatically (to 2000 and 500 unaccredited)
2. Emerging Company IPOs (before filing)
HR 3606 – Bipartisan (Senate next?)
© Capital Markets Advisory Partners, LLC 8
IPO success rates have declined
Source: Capital Markets Advisory Partners, LLC, All rights reserved Includes only corporate issuers. Excludes funds, MLPs, SPACs and REITs.
Success rate of trailing 30 IPO filings
© Capital Markets Advisory Partners, LLC
0%
1%
2%
3%
4%
1960s 1970s 1980s 1990s 2000s 2010s*
Closing price volatility
0%
1%
2%
3%
4%
1960s 1970s 1980s 1990s 2000s 2010s*
Intraday price volatility
Excluding2008 and 2009
9
Market volatility has increased (S&P 500) Standard & Poor's 500 index moves of 4% or higher
*Analysis through 9/30/11 Source: Grant Thornton LLP, Capital Markets Advisory Partners and Capital IQ Original analysis from "Market Swings are Becoming New Standard," New York Times, September 11, 2011
© Capital Markets Advisory Partners, LLC 10
IPO time-to-market has increased
Number of days in registration (Trailing 30-deal average)
© Capital Markets Advisory Partners, LLC
$0
$20
$40
$60
$80
$100
$120
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD
U.S
. Ven
ture
Cap
ital R
aise
d (In
Bill
ions
)
0
100
200
300
400
500
600
700
800
900
0%
2%
4%
6%
8%
10%
12%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD
Num
ber o
f U.S
. IPO
s
U.S
. Une
mpl
oym
ent R
ate
"Penny Stocks" Deal Size < $50 Milllion Deal Size ≥ $50 Million U.S. Unemployment Rate
11
We would have enjoyed a venture-backed post 1990s 'IPO Echo Boom,' but Reg. ATS killed it
Source: National Venture Capital Association Data as of 6/30/11
Sources: Grant Thornton LLP, Capital Markets Advisory Partners, Dealogic and U.S. Department of Labor Data includes corporate IPOs as of 6/30/11, excluding funds, REITs, SPACs and LPs
© Capital Markets Advisory Partners, LLC
0
100
200
300
400
500
600
700
800
900
0%
2%
4%
6%
8%
10%
12%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD
Num
ber o
f U.S
. IPO
s
U.S
. Une
mpl
oym
ent R
ate
"Penny Stocks" Deal Size < $50 Milllion Deal Size ≥ $50 Million U.S. Unemployment Rate
12
We believe the loss of small IPOs is a major contributor to job loss in the United States As seen in the study "Market structure is causing the IPO crisis—and more"
Sources: Grant Thornton LLP, Capital Markets Advisory Partners, Dealogic and U.S. Department of Labor Data includes corporate IPOs as of 6/30/11, excluding funds, REITs, SPACs and LPs
© Capital Markets Advisory Partners, LLC 13
We should be approaching 1,000 IPOs/year and < 5% unemployment
The 'U.S. IPOs (Projected)' estimate assumes 520 IPOs per year starting in 1991 with a 3% compound annual growth rate equivalent to the U.S. GDP growth rate. A simple linear regression model was created using historical data to predict the 'U.S. Unemployment Rate (Projected)' based on this number of projected IPOs. Sources: Grant Thornton LLP, Capital Markets Advisory Partners, Dealogic and U.S. Department of Labor Data includes corporate IPOs as of 6/30/11, excluding funds, REITs, SPACs and LPs
-
100
200
300
400
500
600
700
800
900
1,000
0%
2%
4%
6%
8%
10%
12%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Est.
2012 Est.
2013 Est.
Num
ber o
f U.S
. IPO
s
U.S
. Une
mpl
oym
ent R
ate
U.S. IPOs (Actual) U.S. IPOs (Projected)U.S. Unemployment Rate (Actual) U.S. Unemployment Rate (Projected)
© Capital Markets Advisory Partners, LLC 14
Even big IPOs are struggling!
Success rate of trailing 30 IPO filings with proceeds of at least $500 million
Source: Capital Markets Advisory Partners, LLC, All rights reserved Includes only corporate issuers. Excludes funds, MLPs, SPACs and REITs.
© Capital Markets Advisory Partners, LLC
Loss of the Ecosystem: Underwriting Groups
Microsoft’s IPO (1986) vs. LinkedIn’s IPO (2011)
15
© Capital Markets Advisory Partners, LLC Source: Microsoft IPO Final Prospectus, Capital Markets Advisory Partners, LLC.
16
Microsoft IPO: $58,695,000 March 13, 1986 Underwriter Table from Final Prospectus 116 Underwriters (p. 1 of 3)
© Capital Markets Advisory Partners, LLC 17
Microsoft IPO: $58,695,000 March 13, 1986 Underwriter Table from Final Prospectus 116 underwriters (p. 2 of 3)
Source: Microsoft IPO Final Prospectus, Capital Markets Advisory Partners, LLC.
© Capital Markets Advisory Partners, LLC 18
Microsoft IPO: $58,695,000 March 13, 1986 Underwriter Table from Final Prospectus 116 underwriters (p. 3 of 3)
Source: Microsoft IPO Final Prospectus, Capital Markets Advisory Partners, LLC.
© Capital Markets Advisory Partners, LLC Source: LinkedIn IPO Final Prospectus
19
LinkedIn IPO: $352,800,000 May 18, 2011 Underwriter Table from Final Prospectus 5 underwriters
© Capital Markets Advisory Partners, LLC
Capital Markets Advisory Partners
Improving deal results for issuers
20
© Capital Markets Advisory Partners, LLC 21
21
• Cut execution risk • Increase demand • Improve allocation quality and control • Improve pricing dynamics • Improve aftermarket performance
Objectives
© Capital Markets Advisory Partners, LLC
Ability to market IPOs has deteriorated with shift away from IPOs
Source: Capital Markets Advisory Partners and Dealogic. Excludes funds, REITs, SPACs and LPs. Data through Dec. 2011
IPOs
Follow-ons
Convertibles
© Capital Markets Advisory Partners, LLC 23
“Supply Chain” Source: http://en.wikipedia.org/wiki/Supply_chain • A supply chain is a system of organizations, people, technology,
activities, information and resources involved in moving a product or service from supplier to customer. e]
“Equity Capital Supply Chain”
• An equity capital supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service investment opportunities from supplier issuers to customer investors. value chains.[2]
© Capital Markets Advisory Partners, LLC
Investment Banks | "Supply Push"
24
Source: David Weild and Ed Kim, Capital Markets Advisory Partners, LLC - © 2012 All Rights Reserved
"Happy Days" of Distribution 1990s (High Tick Sizes & Commissions)
Venture A & B Rounds
Angels
Initial Public
Offering Venture C, D &
Mezzanine
Strategics &
Crossover
Retail Brokers
Middle Market Sales
Institutional Sales
Friends
Family
Angels
Start-up Financing
Strategics
Long-Term & Small-Cap Inst.
Retail Investors (Advised)
Investors Drivers
Large Cap Institutions
Outcomes Sales Channels Private Financing
M&A
Unwind
© Capital Markets Advisory Partners, LLC
Retail Investors (Advised)
25
Source: David Weild and Ed Kim, Capital Markets Advisory Partners, LLC - © 2012 All Rights Reserved
Venture A & B Rounds
Angels
Initial Public
Offering Venture C, D &
Mezzanine
Strategics &
Crossover
Retail Brokers
Institutional Sales High
Velocity Institutions
Large Cap Institutions
Friends
Family
Angels
Start-up Financing
Strategics
M&A
Drivers Sales Channels Investors Outcomes Private Financing
Unwind
Investment Banks | "Supply Push"
Investment Banks | "Supply Push"
Long-Term & Small-Cap Inst.
(Self-Directed)
Online Self-
Directed
Distribution for Most IPOs 2012(e.g. IPOs that need marketing support)
Retail Investors
(Self-Directed)
© Capital Markets Advisory Partners, LLC 26
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Top 50 fundamental institutional investors ranked by market value of shares held are mostly smaller investors that are not the focus of large investment banks
Market Cap. $7.24 B LinkedIn Corporation “Demand Pull”
© Capital Markets Advisory Partners, LLC 27
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LinkedIn Corporation “Demand Pull”
52% (26 of 50) of LinkedIn investors are below the priority line of most investment banks.
Market Cap. $7.24 B
© Capital Markets Advisory Partners, LLC 28
(March 16, 2011 – IPO)
William Blair & Company Pacific Crest Securities
Piper Jaffray JMP Securities
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Top 50 fundamental institutional investors ranked by market value of shares held are mostly smaller investors that are not the focus of large investment banks
Market Cap. $0.88 B Cornerstone OnDemand Inc.“Supply Push”
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© Capital Markets Advisory Partners, LLC 29
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Cornerstone OnDemand Inc. “Supply Push” 31% (14 of 42) of Cornerstone OnDemand investors are below the priority line of most investment banks.
Market Cap. $0.88 B
© Capital Markets Advisory Partners, LLC 30
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Large Wall Street firms focus on the Top 50 (out of 3,000 accounts) that represent 80% of the commission ‘pie’ Top 50 fundamentally oriented U.S. institutions by equity assets
© Capital Markets Advisory Partners, LLC 31
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Ass
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Large Cap Mid Cap Small Cap Micro Cap Nano Cap
31
Category Definitions: Nano Cap = Less than $100 million, Micro Cap = $100 million-$500 million, Small Cap = $500+ million-$2 billion, Mid Cap = $2+ billion-$10 billion, Large Cap = Greater than $10 billion
However, these investors are large-cap dominated Top 50 fundamentally oriented U.S. institutions by Equity AUM
Top 50 fundament U.S. institutions – AUM broken down by market cap
© Capital Markets Advisory Partners, LLC 32
$0
$1,000,000,000,000
$2,000,000,000,000
$3,000,000,000,000
$4,000,000,000,000
$5,000,000,000,000
$6,000,000,000,000
$7,000,000,000,000
$8,000,000,000,000
Tier 1
Tier 2
Tier 3
Tier 4
Tier 5
Tier 6
Tier 7
Tier 8
Tier 9
Tier 10
Tier 11
Tier 12
Tier 13
Tier 14
Tier 15
Tier 16
Tier 17
Tier 18
Tier 19
Tier 20
Tier 21
Tier 22
Tier 23
Tier 24
Tier 25
Tier 26
Tier 27
Tier 28
Tier 29
Tier 30
Tier 31
Tier 32
Tier 33
Tier 34
Tier 35
Tier 36
Equi
ty A
sset
s
Market Value ≤ $2 billion Market Value > $2 billion
2010
32
By 2010 – Small (and Mid) cap shifting out of Top 100 Distribution of fundamentally oriented U.S. institutions in 2010 Each tier = 100* institutions ranked by equity assets (e.g., 1st tier = top 100 institutions)
*36th tier = 43 institutions
Not reached by Wall Street
Not effec1vely navigated by Wall Street
© Capital Markets Advisory Partners, LLC 33 33
Smaller accounts care about small and mid-cap Distribution of fundamentally oriented U.S. institutions in 2010: Equity assets less than $1 billion Each tier = 100* institutions ranked by equity assets (e.g., 1st tier = top 100 institutions)
*36th tier = 43 institutions
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
Tier 32 Tier 33 Tier 34 Tier 35 Tier 36
Equi
ty A
sset
s
Market Value ≤ $2 billion Market Value > $2 billion
2010
© Capital Markets Advisory Partners, LLC
One shot to get it right
Why is a salesman going to support a public company for a revenue opportunity of only 1.5 cents/shares?
Issuers must be broadly marketed on the offering(s) when real money is at stake!
34
© Capital Markets Advisory Partners, LLC 35
Total Comparables Holdings: 1- 50
-‐-‐
100,000
200,000
300,000
400,000
500,000
600,000
700,000
-‐-‐
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Fide
lity Managem
ent &
Research Co
. T. Row
e Price Associates, Inc.
Wells Capital M
anagem
ent, Inc.
Jenn
ison Associates LLC
Morgan Stanley Investmen
t Managem
ent, Inc.
Fred
Alger M
anagem
ent, Inc.
Ar1san Partners L
P MFS Investmen
t Managem
ent, Inc.
JPMorgan Asset M
anagem
ent, Inc.
Wellington
Managem
ent C
o. LLP
Sand
s Capita
l Managem
ent LLC
AllianceB
ernstein LP
Lord Abb
eS & Co. LLC
Columbia Wanger A
sset M
anagem
ent LLC
Northern Trust Investm
ents
Goldman Sachs Asset M
anagem
ent LP
TCW Asset M
anagem
ent C
o., Inc.
Cham
plain Investmen
t Partners L
LC
Columbia Managem
ent Investm
ent A
dvise
rs LLC
Turner Investmen
t Partners, Inc.
Franklin Advise
rs, Inc.
Wadde
ll & Reed Investmen
t Managem
ent C
o.
TIAA
-‐CRE
F Asset M
anagem
ent LLC
JAT Capital M
anagem
ent LLC
Next C
entury Growth Investors L
LC
American Cen
tury Investmen
t Managem
ent, Inc.
Allianz Global Investors Capita
l LLC
Century Capital M
anagem
ent LLC
Valiant Capita
l Partners
Citade
l Adviso
rs LLC
St. D
enis J. Villere & Co. LLC
Steadfast F
inancial LLC
Cadian Capita
l Managem
ent LLC
Janu
s Capita
l Managem
ent LLC
Wes]ield Capital M
anagem
ent C
o. LP
Apex Capita
l LLC
Empire Capita
l Managem
ent LLC
Opp
enhe
imerFund
s, Inc.
Wasatch Adviso
rs, Inc.
UBS Global A
sset M
anagem
ent
Renaissance Techn
ologies L
LC
Columbu
s Circle Investors
Lone
Pine Capital LLC
Deutsche
Bank Investmen
t Managem
ent, Inc.
Marsic
o Capital M
anagem
ent LLC
William Blair & Co. LLC (Investm
ent M
anagem
ent)
Calamos Adviso
rs LLC
Zevenb
ergen Capital Investm
ents LLC
SRS Investmen
t Managem
ent LLC
Dreyfus Investm
ent A
dviso
rs, Inc.
Total A
ssets ($ Bn
)
% Sha
res O
utstan
ding
Salesforce.com Inc. SuccessFactors Inc. Taleo Corp. (Cl A) Concur Technologies Inc. NetSuite Inc. LogMeIn Inc. LinkedIn CorporaDon SolarWinds Inc Qlik Technologies Inc. VMware Inc. OpenTable Inc. Constant Contact Inc. ServiceSource InternaDonal Inc. Cornerstone OnDemand Inc. Responsys Inc. AUM if > 25Bn AUM if < 25Bn
© Capital Markets Advisory Partners, LLC 36
Total Comparables Holdings: 51- 100
-‐-‐
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
-‐-‐
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
ING Investmen
t Managem
ent C
o.
Capital Research Glob
al Investors
Russell Investm
ent M
anagem
ent C
o.
Eagle Asset M
anagem
ent, Inc.
Fron
1er C
apita
l Managem
ent C
o. LLC
ClearBrid
ge Adviso
rs LLC
Northern Trust C
o. of C
onne
c1cut
Wall Street A
ssociates L
LC
Pyramis Glob
al Adviso
rs LLC
RCM Capita
l Managem
ent LLC
Loom
is, Sayles &
Co. LP
Riverbrid
ge Partners L
LC
Tiger C
onsumer M
anagem
ent LLC
Morgan Stanley & Co. LLC
Dimen
sional Fun
d Ad
visors, Inc.
Geod
e Capital M
anagem
ent LLC
Gilder, G
agno
n, How
e & Co. LLC
Valinor M
anagem
ent LLC
Contou
r Asset M
anagem
ent LLC
BAMCO
, Inc.
The Bo
ston
Com
pany Asset M
anagem
ent LLC
Tiger G
lobal M
anagem
ent LLC
Aberde
en Asset M
anagem
ent, Inc.
Columbia Partne
rs LLC Investmen
t Managem
ent
Brow
n Capital M
anagem
ent, Inc.
Invesco Ad
visers, Inc.
Cor1na Asset M
anagem
ent LLC
UBS O'Con
nor LLC
Rainier Investm
ent M
anagem
ent, Inc.
Kornitzer Capita
l Managem
ent, Inc.
Sen1
nel A
sset M
anagem
ent, Inc.
Brow
n Investmen
t Adviso
ry, Inc.
Cade
nce Capital M
anagem
ent LLC
Thriv
ent Investm
ent M
anagem
ent, Inc.
Scop
ia M
anagem
ent, Inc.
Kalm
ar Investmen
ts, Inc.
Broo
kside Capital LLC
Shanno
n River P
artners
Gene
va Investmen
t Managem
ent o
f Chicago LLC
Fede
rated Investmen
t Managem
ent C
o.
Capital W
orld Investors
First T
rust Adviso
rs LP
Ashford Capital M
anagem
ent, Inc.
Winslo
w Capita
l Managem
ent, Inc.
Can1
llon Capital M
anagem
ent LLC
Gabe
lli Fun
ds LLC
Blue
fin Investmen
t Managem
ent
New
York State Co
mmon
Re1
remen
t Fun
d Merrill Lynch Priv
ate Client Group
Mellon Capital M
anagem
ent C
orp.
Total A
ssets ($ Bn
)
% Sha
res O
utstan
ding
Salesforce.com Inc. SuccessFactors Inc. Taleo Corp. (Cl A) Concur Technologies Inc. NetSuite Inc. LogMeIn Inc. LinkedIn CorporaDon SolarWinds Inc Qlik Technologies Inc. VMware Inc. OpenTable Inc. Constant Contact Inc. ServiceSource InternaDonal Inc. Cornerstone OnDemand Inc. Responsys Inc. AUM if > 25Bn AUM if < 25Bn
© Capital Markets Advisory Partners, LLC 37
Total Comparables Holdings: 101- 150
-‐-‐
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
-‐-‐
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0 Ohio Pu
blic Employees R
e1remen
t System
Principal G
lobal Investors LLC
Cupp
s Capita
l Managem
ent LLC
Rice, H
all, James & Associates L
LC
Cred
it Suisse (United States)
Standard Life
Investmen
ts, Inc. (United States)
Thornb
urg Investmen
t Managem
ent, Inc.
The California Pu
blic Employees R
e1remen
t System
Pier Capita
l LLC
GE Asset M
anagem
ent, Inc.
D. E. Shaw & Co., Inc.
GAMCO
Investors
New
Jersey Division
of Investm
ent
Welch & Forbe
s LLC
RS Investmen
t Managem
ent C
o. LLC
Mason
Street A
dviso
rs LLC
Silvant C
apita
l Managem
ent
Luther King Capital M
anagem
ent C
orp.
Nuveen Asset M
anagem
ent LLC
Manning & Napier A
dviso
rs LLC
Goldman Sachs & Co.
Emerald Ad
visers, Inc.
S.A.C. Capita
l Adviso
rs LP
Ruane, Cun
niff & Goldfarb, Inc.
Charles S
chwab Investmen
t Managem
ent, Inc.
Bank of A
merica Merrill Lynch
Arbo
r Capita
l Managem
ent LLC (M
inne
sota)
Morgan Stanley Sm
ith Barne
y LLC (Securi1es)
TimesSquare Capita
l Managem
ent LLC
Crosslink Capita
l, Inc.
Neu
berger Berman LLC
Marble Arch Partners L
P Opp
enhe
imer Asset M
anagem
ent
SunA
merica Asset M
anagem
ent C
orp.
Palisade Capital M
anagem
ent LLC
M. A
. Weatherbie & Co., Inc.
Mutual of A
merica Capital M
anagem
ent C
orp.
Atlanta Capital M
anagem
ent C
o. LLC
IronB
ridge Capita
l Managem
ent LP
Obe
rweis A
sset M
anagem
ent, Inc.
Jacobs Levy Eq
uity M
anagem
ent, Inc.
Fede
rated Glob
al Investmen
t Managem
ent C
orp.
Gagnon
Securi1es LLC
Rhum
bLine Ad
visers Ltd. Partnership
Harris Investmen
t Managem
ent, Inc.
Cornerston
e Capital M
anagem
ent, Inc.
Delaware Managem
ent B
usiness T
rust
Deutsche
Bank Securi1
es, Inc.
Jeffe
ries &
Co., Inc. (New
York)
Severn River Capita
l Managem
ent LLC
Total A
ssets ($ Bn
)
% Sha
res O
utstan
ding
Salesforce.com Inc. SuccessFactors Inc. Taleo Corp. (Cl A) Concur Technologies Inc. NetSuite Inc. LogMeIn Inc. LinkedIn CorporaDon SolarWinds Inc Qlik Technologies Inc. VMware Inc. OpenTable Inc. Constant Contact Inc. ServiceSource InternaDonal Inc. Cornerstone OnDemand Inc. Responsys Inc. AUM if > 25Bn AUM if < 25Bn
© Capital Markets Advisory Partners, LLC 38
Total Comparables Holdings: 151- 200
-‐-‐
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
-‐-‐
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
D. F. D
ent &
Co., Inc.
Alkeon
Capita
l Managem
ent LLC
Tygh Capita
l Managem
ent, Inc.
Copp
er Rock Capital Partners L
LC
Gene
va Capita
l Managem
ent Ltd.
Park W
est A
sset M
anagem
ent LLC
Fidu
ciary Managem
ent A
ssociates L
LC
The Florida State Bo
ard of Adm
inistra1o
n Granahan Investmen
t Managem
ent, Inc.
Parametric Por]o
lio Associates
Coatue
Managem
ent LLC
ASractor Investmen
t Managem
ent, Inc.
OZ Managem
ent LLC
Susque
hann
a Investmen
t Group
LLC
New
York State Teache
rs Re1
remen
t System
Chinoo
k Capital M
anagem
ent LLC
Broadview Adviso
rs LLC
Two Sigm
a Investmen
ts LLC
Jetstream Capita
l LLC
State Teache
rs Re1
remen
t System of O
hio
Technical Financial Services L
LC
Mazam
a Capital M
anagem
ent, Inc.
Metropo
litan Life
Insurance Co
. Invesco Po
werShares Capita
l Managem
ent LLC
Peregrine Capital M
anagem
ent, Inc.
Kentucky Teachers' Re
1rem
ent S
ystem
Gabe
lli Securi1es, Inc.
Hutchin Hill Capital LP
Susque
hann
a Financial G
roup
LLP
SEI Investm
ents M
anagem
ent C
orp.
Cavalry
Managem
ent G
roup
LLC
Benn
eS Law
rence Managem
ent LLC
California State Teache
rs Re1
remen
t System
Apex Capita
l Managem
ent, Inc.
Colorado
Pub
lic Employees' Re
1rem
ent A
ssocia1o
n Fort W
ashington Investmen
t Adviso
rs, Inc.
Weiss M
ul1-‐Strategy Advise
rs LLC
300 North Capita
l LLC
Barclays Capita
l, Inc.
Herm
es Fun
d Managers N
orth America LP
M&I Investm
ent M
anagem
ent C
orp.
Dawson Capital M
anagem
ent, Inc.
P.A.W. Capita
l Corp.
GW Capita
l Managem
ent LLC
Fortress Investmen
t Group
Highland
Capita
l Managem
ent LP
Ensemble Capital M
anagem
ent LLC
Balyasny Asset M
anagem
ent LLC
Putnam
Investmen
t Managem
ent LLC
Security Investors L
LC
Total A
ssets ($ Bn
)
% Sha
res O
utstan
ding
Salesforce.com Inc. SuccessFactors Inc. Taleo Corp. (Cl A) Concur Technologies Inc. NetSuite Inc. LogMeIn Inc. LinkedIn CorporaDon SolarWinds Inc Qlik Technologies Inc. VMware Inc. OpenTable Inc. Constant Contact Inc. ServiceSource InternaDonal Inc. Cornerstone OnDemand Inc. Responsys Inc. AUM if > 25Bn AUM if < 25Bn
© Capital Markets Advisory Partners, LLC 39
Total Comparables Holdings: 201- 250
-‐-‐
50,000
100,000
150,000
200,000
250,000
-‐-‐
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Quan1
ta1ve Managem
ent A
ssociates L
LC
NCM
Capita
l Managem
ent G
roup
, Inc.
Marshall W
ace North America LP
Employees R
e1remen
t System of T
exas
Lane
xa Global M
anagem
ent G
P LLC
EULAV Asset M
anagem
ent LLC
NorthPo
inte Capita
l LLC
S Squared Techno
logy LLC
USA
A Investmen
t Managem
ent C
orp.
Sit Investm
ent A
ssociates, Inc.
7x7 Asset M
anagem
ent LLC
Driehaus Capita
l Managem
ent LLC
Roanoke Asset M
anagem
ent C
orp.
Pion
eer Investm
ent M
anagem
ent, Inc.
Partne
r Fun
d Managem
ent LP
Millen
nium
Managem
ent LLC
Nicho
las Investm
ent P
artners L
P AH
Lisa
n1 Capita
l Growth LLC
Miura Global M
anagem
ent LLC
Eaton Va
nce Managem
ent, Inc.
Banc of A
merica Securi1
es LLC
Texas P
ermanen
t Schoo
l Fun
d Kingdo
m Ridge Capita
l LLC
Los A
ngeles Capita
l Mgm
t & Equ
ity Research, Inc.
Diversified
Trust Co.
Alydar Partners L
LC
Michigan De
partmen
t of T
reasury
RBC Capital M
arkets Equ
ity Research
Transamerica Investmen
t Managem
ent LLC
Victory Capital M
anagem
ent, Inc.
Comerica Asset M
anagem
ent
Soros F
und Managem
ent LLC
Passpo
rt Capita
l LLC
CR Intrinsic
Investors L
LC
Carlson
Capita
l LP
Pied
mon
t Investm
ent A
dviso
rs LLC
Fijh
Third Asset M
anagem
ent, Inc.
Manulife
Asset M
anagem
ent (United States) LLC
Jacob Asset M
anagem
ent o
f New
York LLC
Portolan Capita
l Managem
ent LLC
Illinois S
tate Board of Investm
ent
Fidu
ciary Trust C
o. Interna1
onal
Wells Fargo Ba
nk N.A.
Ci1g
roup
Global M
arkets (U
nited States)
Kopp
Investmen
t Adviso
rs LLC
Union
Bank NA (San Francisc
o, Califo
rnia)
Taylor Investmen
t Cou
nselors
Conatus C
apita
l Managem
ent LP
Washington Capital M
anagem
ent, Inc.
Wells Fargo Ad
visors LLC
Total A
ssets ($ Bn
)
% Sha
res O
utstan
ding
Salesforce.com Inc. SuccessFactors Inc. Taleo Corp. (Cl A) Concur Technologies Inc. NetSuite Inc. LogMeIn Inc. LinkedIn CorporaDon SolarWinds Inc Qlik Technologies Inc. VMware Inc. OpenTable Inc. Constant Contact Inc. ServiceSource InternaDonal Inc. Cornerstone OnDemand Inc. Responsys Inc. AUM if > 25Bn AUM if < 25Bn
© Capital Markets Advisory Partners, LLC 40 40
Proof of Concept: Case Study
The Transaction:
We were brought on to advise a micro -cap business services company on their $30mm IPO. Many involved parties indicated that the deal was unlikely to be completed to due lack of investor interest (mostly due to liquidity concerns).
Our Work:
We used our account targeting methods to more than double demand on the offering, by identifying long-tail investors (investors that were not actively covered by the Book Runner) who purchased 51% of the offering and built larger positions. In the after market, and were the 3 largest (non-insider) stock holders as of the latest holdings report.
⇒ Electronically marketed to 250 PMs and Analysts through Book Runner, ⇒ Supported Book Runner in targeting work leveraged by Book Runner's sales force.
⇒ 51% of allocation including 3 largest shareholders.
=> Completion of a microcap offering that was “unlikely to get done” according to many involved.
51% CMAP Accounts
49% Book Runner Accounts
© Capital Markets Advisory Partners, LLC
David Weild 212.542.9979 david.weild@cmapartners.com
The IPO Crisis And What We’re Doing To Fix It: Market structure is too low cost to pay for the infrastructure needed to support capital formation. Improved strategies are needed. We offer some.
ISEEE Orlando, FL March 25, 2012
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