Healthy Startfor IPOs

Q1 Proceeds Raised

Q1 Average Proceeds Q1 IPO Count

Following a year that can be characterized by sluggish IPO activity, 2017 is off to a strong start. At the conclusion of Q1 2017, 29 IPOs were issued compared to 10 in Q1 2016, signifying a 190% increase in IPO activity year-over-year. Meanwhile, the proceeds raised from IPOs in Q1 of 2017 amounted to $12.8 billion in comparison to just $1.3 billion in Q1 of 2016.

While Snap’s debut on the New York Stock Exchange was met with much fanfare and delivered as most thought it would, it is still too early to tell if its IPO will be considered a success story among investors. Although the IPO met pricing expectations, it is now important to watch its post-IPO pricing performance as it adjusts to life as a public company.

Although Snap’s IPO and its hype took center stage in Q1 and overshadowed other IPOs such as Canada Goose and J. Jill, moving forward, we expect to see the most activity and growth among middle market IPOs.

In a favorable IPO environment, the sheer number of middle market growth companies would suggest an accelerated level of IPO activity. The greater number of middle market IPO success stories; the greater number of future IPOs.

Mid-market management teams considering an IPO are more likely to issue an IPO if like companies have been successful doing the same.

The success of these IPOs will drive activity through the rest of the year. In particular, we expect to see continued and robust activity in the technology sector. The market will continue to be selective, but good companies characterized by strong management, good growth, and solid financial metrics will continue to be funded.

Q1 2017 Middle Market Equity Capital Report

2017

2016

$12.8 billion ($8.9 billion

excluding Snap)

$1.3 billion

2017

2016

$441 million ($318 million

excluding Snap)

$130 million

2017

2016

29

10

We expect to see continued and robust activity in the technology sector. The market will continue to be selective, but good companies with a good story and strong technology will continue to be funded.

Q1 Middle Market IPOs

Q1 Middle Market Follow On IPOs

20172016

$2.6 billion

$392 million

$173million

$78 million

15

5

PROCEEDS

AVERAGE PROCEEDS IPO ACTIVITY20172016

20172016

$13.6 billion

$6.5 billion

PROCEEDS

$76 million

$78 million 175

85

AVERAGE PROCEEDS IPO ACTIVITY

2017

2016

2017

2016

2017

2016

As we look ahead to Q2 and Q3, we expect to see an uptick in the number of middle market companies pursuing a dual-track strategy due to the continued availability of private capital and interest from strategic investors, along with favorable IPO market conditions. More companies may look to pursue a private transaction and an IPO simultaneously, selecting the option that yields greater benefits for the company and its shareholders.

Conclusion: Looking ForwardThe first quarter of 2017 saw a welcome increase in IPO activity and we expect the momentum to continue over the course of the year, especially now that some of the dust has settled surrounding the issue of interest rates and we have a better sense of the general policy direction of the Trump administration. Under more favorable market conditions, companies that postponed or perhaps cancelled their IPO plans in 2016 may now be better positioned to pursue an IPO in 2017.Companies considering going public in the next year should pay close attention to Jay Clayton, the nominee to lead the Securities Exchange Commission, who has voiced support for rolling back regulations that may have contributed to reduced IPO activity in an effort to boost public markets. Look for some kind of incentive program to stimulate smaller (under $50 million in proceeds) IPO activity which has been languishing.

About CohnReznick’s Public Companies GroupUtilizing comprehensive resources and deep industry expertise, the professionals of CohnReznick’s Public Companies Group understand the goals of both middle market companies and investors to deliver timely and appropriate solutions and services. We understand the challenges and opportunities of the capital markets and possess the forward thinking technical skills and experience necessary to address the needs of clients, investment bankers, investment advisors, attorneys, lenders, investors, managements, audit committees, and the U.S. Securities and Exchange Commission and other regulatory authorities. To learn more, visit: https://www.cohnreznick.com/services/accounting-and-assurance/public-company-services

ContactFor more information, please contact Alex Castelli, Partner, National Liquidity and Capital Formation Advisory Group and Technology and Life Sciences Industry Practice Leader, at alex.castelli@cohnreznick.com or 703-744-6708.

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