capital market experts - the ipo crisis and what we’re doing to fix it: market ... ·...

© Capital Markets Advisory Partners, LLC

David Weild 212.542.9979 [email protected]

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


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)


*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


•  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


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?)


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


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


IPO time-to-market has increased

Number of days in registration (Trailing 30-deal average)


$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%

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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


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


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)


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.


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)


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.


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

Improving deal results for issuers

20


21

•  Cut execution risk •  Increase demand •  Improve allocation quality and control •  Improve pricing dynamics •  Improve aftermarket performance

Objectives


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


“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]


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


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



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)


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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”


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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


(March 16, 2011 – IPO)

William Blair & Company Pacific Crest Securities

Piper Jaffray JMP Securities

28

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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P M

azam

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agem

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emen

t LLC

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st C

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ison

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illia

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agem

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29

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


$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

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.)D

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agem

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men

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agem

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k St

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ley,

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uss

LLC

Rus

sell I

nves

tmen

t Gro

upSt

ate

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Insu

ranc

e C

o. A

sset

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agem

ent

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an P

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LPTh

e C

alifo

rnia

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lic E

mpl

oyee

s R

etire

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itigr

oup

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bal M

arke

ts (U

.S.)

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ett &

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Equi

ty A

sset

s ($

s in

Mill

ions

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30

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


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10%

20%

30%

40%

50%

60%

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owe

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s, In

c.

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anag

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t Co.

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Bla

ckR

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s LL

C

TIA

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Ass

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anag

emen

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Ber

nste

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P

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anag

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anag

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c.

JPM

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agem

ent,

Inc.

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, Inc

.

Ban

k of

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k M

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agem

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ecur

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s LP

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e (U

.S.)

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ank I

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t Man

agem

ent, I

nc.

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ls C

apita

l Man

agem

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agem

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, Inc

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ublic

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grou

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.)

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Perc

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ge o

f Tot

al E

quity

Ass

ets

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


$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


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


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



-‐-‐

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




-‐-‐

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




-‐-‐

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




-‐-‐

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


© 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


David Weild 212.542.9979 [email protected]

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 market experts - the ipo crisis and what we’re doing to fix it: market ... ·...

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