By Brett Goetschius
An atmosphere of optimism and excitement pervaded the hallways and forums at the microcap growth market’s newest national conference, the Growth Capital Expo. Emerging growth company management teams and investors explored capital investment opportunities at the event, and learned from leading experts of the innovations in investment and capital formation that are transforming the market.
More than 400 emerging growth company investors, bankers, executives and professionals came together at Caesars Palace in Las Vegas on April 29 to May 1, 2014, to discuss the latest market trends in equity private placements, initial and alternative public offerings, and private growth capital. Management teams from more than 60 public and later-stage private emerging growth companies made presentations and participated in over 350 one-on-one meetings with investors and placement agents over the two-day Expo. Many joined the pre-conference IPO Bootcamp on April 29 to get insight and practical advice on navigating the going-public process, choosing the right option for their companies, and preparing for life in the public markets.
The conference took place against a backdrop of strong market performance in the year’s first half that imbued the event with energy and a focus on dealmaking. Emerging growth issuers midway through 2014 raised $6.2 billion in 349 transactions for an average deal size of $17.6 million, a year-over-year increase of $1 billion in dollar volume growth while the number of transactions grew by 40, according to PlacementTracker, a service of Sagient Research. So far, the equity private placement (EPP) market is on pace to match or surpass the dollar and deal volume of $11.6 billion and 642, respectively, posted in all of 2013.
Biotechnology companies were by far the most active emerging growth issuers in the first half of the year, riding the industry’s IPO momentum generated in the last half of 2013, despite a pullback in the stocks early this year. Biotech companies raised $1.7 billion in 76 transactions in the first half of 2014 for an average raise of $22.4 million. That’s only $300 million short of the total proceeds raised by biotech firms in all of 2013 in 124 transactions.
Asia-based U.S.-listed companies were a resurgent area of emerging growth equity investment in the first half of the year. Issuers from China and Singapore raised $105 million in 11 EPPs in the first half of 2014, four more deals and $35 million more in proceeds than the same period last year.
The booming IPO market drove interest in the Expo’s pre-event workshop, the IPO Bootcamp. More than 100 pre-IPO and early-stage public company executives packed the room for the half-day session on preparing for, executing, and thriving after a going-public transaction. The workshop was keynoted by small cap corporate board adviser and former emerging growth fund manager Adam Epstein of Third Creek Advisors.
Continue to Page 2...
Epstein, author of The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small Cap Companies (New York: McGraw Hill, 2012), noted that going public can be a “huge benefit” for companies with the right management, internal controls, financial visibility and corporate governance in place – but “an expensive, business‐jeopardizing waste of time” for those which do not. Epstein outlined the key elements of a successful going-public transaction, noting the avoidable yet repeated mistakes company boards make during the process: thinking public status will ensure access to capital (access is earned by performance he says), using stock as ready currency for acquisitions (the greater fool theory in action), or that an IPO will provide a ready exit for early investors and management (maybe, and maybe not), among the most common.
Epstein joined public offerings experts from the emerging growth banking, legal and investment worlds to lead the workshop’s afternoon panel discussions. The panels offered the attending executives advice, tips and tools for deciding whether, when and how to go public; the essential preparation period, executing the transaction, and succeeding in the post-public aftermarket.
The first day of the Expo’s general session was devoted to trends and issues impacting the institutional emerging growth equity market. The morning featured discussion panels on equity private placements, registered direct offerings, confidentially-marketed public offerings (CMPOs) and at-the-market offerings (ATMs). The discussions were led by representatives from the leading investment banks and law firms active in emerging growth company finance, including Lazard, Cantor Fitzgerald, William Blair, Lowenstein Sandler and Goodwin Procter.
The afternoon sessions focused on litigation and enforcement issues, alternative public offerings, depository trust clearing and chill issues, and investor activism in small cap companies. Legal counsel from top-ranked securities practices at Venable, BuckleySandler, Schulte Roth & Zabel, Ellenoff Grossman & Schole, and Mintz Levin joined with investor relations experts from Sharon Merrill and Sitrick & Co. to offer advice and analysis to attendees.
Day Two of the Expo was devoted to the changes being thrust onto the emerging growth company finance market by the JOBS Act. Howard Leonhardt of the California StockXchange keynoted the day, speaking on the “New Age of Deal Marketing” the Act has ushered in with the repeal of the ban on securities marketing and the advent of crowd finance via online investment portals.
The morning sessions focused on the new requirements for employing general solicitation to market equity investments online to both accredited investors and the general public via Rule 506(c) offerings. Leading legal experts and crowd finance entrepreneurs from Davis Wright & Tremaine, Troy Gould, MicroVentures, and IssuWorks explored the opportunities and pitfalls of this brave new world with forum attendees.
Later Day Two sessions focused on the proposed expansion of Reg A offerings to allow companies to raise up to $50 million with reduced reporting requirements, led by Cromwell Coulson of OTC Markets Group, and examples of successful early-movers in the race to develop institutional-quality online funding platforms, including David Manshoory of AssetAvenue, Alon Goron of Invested.in, Scott Jordan of HealthiosXchange, and Adam Hooper of REALCrowd.
The last panel of the Growth Capital Expo 2014 proved to be one of the most popular of the conference, as investors and senior executives of public companies in the legal marijuana market held forth on the opportunities and risks of operating in this booming industry. Troy Dayton of the ArcView Group moderated the discussion with Dr. Lawrence May of Tauriga Sciences, Justin Hartfield of Ghost Group, Kurshid Khoja of Greenbridge Corporate Counsel, Dr. Mark Rabe of Medical Marijuana Sciences, and Doug Leighton of Dutchess Capital.
The Growth Capital Expo returns next April to Las Vegas for its second year. Information on the event program, dates and venue will be announced soon at www.GrowthCapitalExpo.com.
Since publishing, the Growth Capital Expo has announced dates for it's upcoming conference: April 12 - 14, 2015 at Caesars Palce in Las Vegas, NV. For more information about registering to attend, sponsor or present, please visit the website above.
© 2017 Stock News Now
Supported by Superior Web Solutions