New Nixon Peabody survey finds optimism, challenges in robust IPO

Daily Record (Rochester, NY), Jul 26, 2007

More than 80 percent of senior executives whose companies recently underwent initial public offerings expect the U.S. IPO market to remain robust, according to IPO Executive Insights 2007, a survey recently commissioned by Nixon Peabody LLP.

According to a release from Nixon Peabody, the survey is a compilation of accounts from chief executive and chief financial officers who led their companies through an IPO in the past three years. The survey reflects insights on a range of issues, including the IPO process, post-IPO success and the future outlook for IPO activity.

A majority of senior executives reported that their companies are now trading higher than on their first day's close and, in more than half of the transactions surveyed, management and existing shareholders did not cash out equity stakes. According to the survey, increased access to capital was the primary reason for these companies' going public.

"Although the U.S. IPO market has a long way to go before approaching the high water mark set during the first quarter of 2000 - when there were 137 IPOs raising a total of $21.8 billion - favorable IPO market conditions are expected to continue for the foreseeable future," said John C. Partigan, a Nixon partner and leader of the firm's securities practice group.

The IPO market rebounded in 2006 and, despite the spotlight on mergers, acquisitions and private equity, has continued its strong trajectory in the first quarter of 2007, a seven-year high in terms of volume and proceeds.

Building on this growth, 81 percent of the executives surveyed said they believe the amount of capital raised through IPOs during the next 12 months will increase or remain the same. These executives expect the NASDAQ and the London Stock Exchange (AIM) to see the most IPO listings this year, despite talk of Hong Kong's domination of the market.

Underscoring the importance of venture capital in funding emerging companies, 52 percent of responding companies were backed by venture capital.

Despite the strong optimism, respondents also see challenges facing companies as they prepare for and go through the IPO process. Attracting qualified independent directors was seen as the biggest corporate governance challenge facing emerging companies, the Nixon Peabody release continues. Respondents faced a range of challenging accounting issues, including auditing of prior accounting periods by new auditors and advance compliance with Sarbanes-Oxley requirements.

Regulation is a major concern to respondents, and 73 percent said they believe SarbOx imposes an excessive degree of regulation and transparency on companies, Nixon Peabody reported.

The full report is available at www.nixonpeabody.com.