Insights & Analysis
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Insights & Analysis
IPO Market Rebound in 2024; Cautious Optimism in 2025 on Hold
After two years of dormancy, the U.S. IPO market made a comeback in 2024. While a return of larger, VC and PE backed IPOs had looked to accelerate, the market turmoil of March and early April has slowed new filings considerably and led to at least 2 large issuers to delay plans for an IPO (Klarna & Stubhub).
2023: A Record Year for Charter and Bylaw Amendments
The number of companies changing their governing documents in 2023 (both their charter and bylaws) was the most in any single year since Deal Point Data (DPD) began tracking this activity on January 1, 2017. The increase in filing activity is largely driven by three issues.
A Review of Proxy Fight Outcomes Under the Universal Proxy Rules
With the outcome determined for all but one annual meeting proxy fight for companies subject to the universal proxy card (UPC) rules, we take the opportunity to examine the full-year results of 2023 proxy fights – the first full year under which the UPC rules were in effect.
The Purpose of Poison Pills
Poison pills are back in the news with an increase in litigation surrounding the device, raising the question of what their proper use is. We examine why and for what purpose poison pills are being used.
IPO Breaks Drought for New Publicly Traded Public Benefit Corporations
In the latest sign the US IPO market may be emerging from the doldrums, a noteworthy event occurred this month: a public benefit corporation ("PBC") completed an IPO. Sezzle Inc., which has elected to be a public benefit corporation under Delaware law, priced its IPO and began trading on the Nasdaq exchange on August 16th. Sezzle's IPO ends what had been a 21-month drought for IPOs completed by PBCs.
Latest Trends in Antitrust Termination Fees
As the M&A regulatory environment has tightened over the last few years, we have seen a significant increase in the inclusion of antitrust termination fees in definitive M&A agreements. An antitrust termination fee is a termination fee potentially payable by the acquirer if the transaction cannot close due to lack of regulatory approval. Essentially, if the deal is blocked by a regulatory agency then the acquirer would be required to pay the antitrust termination fee to the target.
IPO Doldrums
The IPO market has seen a significant downturn since the SPAC-led highs of 2021. The charts and statistics below bring this downturn into sharp focus and illustrate the poor condition of the US IPO market.
SPAC Market Study 2022 – 1st Quarter Update
SPAC deal activity fell sharply in Q1 2022. The number of priced SPAC IPOs dropped from 163 in Q4 2021 to 55 in Q1 2022. Only 34 de-SPAC M&A deals were announced in Q1 compared with 61 in Q4. At the same time the number of withdrawn SPAC deals surged in Q1. Withdrawn SPAC IPOs in Q1 (61) exceeded priced SPAC IPOs (55), and there were 17 withdrawn de-SPAC M&A deals in Q1 vs 28 completed de-SPACs. In addition, there were significant changes involving the use of Termination Fees, PIPE investments, Warrant Coverage, and Acquisition Terms/Durations on SPAC deals in Q1.
SPAC Market Study 2021 – 4th Quarter Year-End Update
In our year-end update we researched SPAC IPO and de-SPAC M&A activity through December 31st. While the number of SPAC IPOs and de-SPAC M&A deals remained relatively robust in Q4 the average size of these deals is dropping. The average size of SPAC IPOs dropped in Q4 for the 3rd consecutive quarter to $176.8 million in average gross proceeds. At the same time the large, mega de-SPAC M&A deals seen in the first 3 quarters were noticeably absent in Q4. No de-SPAC deals announced in Q4 cracked the top 25 all-time largest de-SPACs, resulting in a significant drop in the average size of de-SPAC deals from $2.73B in Q3 to $1.25B in Q4.
SPAC Market Study 2021 – 3rd Quarter Update
In our 3rd Quarter Update to the initial SPAC Market Study released in April we researched SPAC IPO and de-SPAC M&A activity through September 30th. While it doesn't look like the torrid pace of SPAC activity in Q1 will return anytime soon, activity did rebound in Q3 to 88 priced SPAC IPOs from 64 in Q2. We also saw many of the largest de-SPAC M&A deals of all time announced in Q3, including MSP Recovery ($32.5B), Polestar ($20B), and Aurora Innovation ($11B). Despite these very large deals being announced, there is still plenty of SPAC dry powder available for more acquisitions in Q4 and into 2022. As of Sept 30th there were 452 SPAC IPOs still seeking a target, representing a total of $115.1B in gross proceeds raised.
SPAC Market Study 2021 – 2nd Quarter Update
In our 2nd Quarter Update to the initial SPAC Market Study released in April we researched SPAC IPO and de-SPAC M&A activity through June 30th. Although increased scrutiny from the SEC certainly decelerated the pace of SPAC deal activity from Q1 to Q2, many of the largest de-SPAC M&A deals of all time were announced in Q2, and the level of activity was still very robust in comparison to previous years.
Special Purpose Acquisition Company (SPAC) Market Study 2021
Deal Point Data researched every Special Purpose Acquisition Company (SPAC) that filed with the Securities and Exchange Commission from January 1, 2016 to March 31, 2021. We observed these deals throughout the SPAC lifecycle – from registration to IPO pricing to the announcement of a de-SPAC M&A transaction. We reviewed the relevant stock purchase agreements, asset purchase agreements or merger agreements to evaluate key negotiated M&A deal points.
Update on the Prevalence of SPAC IPOs
In our research note dated June 24, 2020 we highlighted the increased prevalence of initial public offerings by special purpose acquisition companies (SPACs) as one of the most notable trends in IPOs in the last few years. What we did not discuss at that time is the explosion of SPACs filing to go public, which are at unprecedented levels.
Increasing Prevalence and Size of SPAC IPOs
The increased prevalence of initial public offerings by special purpose acquisition companies (SPACs) has been one of the most notable trends in IPOs in the last few years. SPACs are blank check companies formed for the purpose of merging with another company following the IPO.
Observations on Recent Poison Pill Activity
As a follow up to our recent note regarding companies increasing use of poison pills to guard against opportunist acquirers and activist investors as a result of the coronavirus pandemic (Corporate America's Medicine Against Coronavirus) here are some additional observations.
Coronavirus Pandemic's Impact on Stock Swap Valuations
Target companies in agreed fixed exchange stock swap transactions have seen the value of the acquirer's shares they are to receive as consideration in the transaction decrease, in some cases significantly, as the coronavirus pandemic continues to impact stock prices.
Corporate America's Medicine Against Coronavirus
Faced with myriad problems caused by the coronavirus pandemic, including significantly depressed stock prices and the ensuing threat of shareholder activism and hostile takeovers, corporate America is turning to an old standby - poison pills.
Coronavirus Impact on M&A Agreement Drafting
Given the uncertainty and rising public health concerns around the coronavirus (COVID-19), Deal Point Data decided to take a look at how practitioners are drafting the material adverse change (MAC) definitions in recently announced transactions. Specifically, we wanted to see whether the target MAC definition included a carveout related to the coronavirus and similar concepts. The inclusion of specific carveouts protects the target in the event that the acquirer attempts to terminate the transaction based on a material adverse change.
Second Most Active U.S. Public M&A Environment on Record
The dollar value of newly announced Merger and Acquisition deals with U.S. publicly traded target companies surged to its highest first half level since the record was set in 2015. According to Deal Point Data's research, $508 billion dollars of M&A deals were announced during the first six months of 2019.
Market Leaders - U.S. Public Mergers
Wachtell, Lipton, Rosen & Katz was the top ranked legal adviser on U.S. public M&A deals announced during the first half of 2019. Wachtell advised on 14 public deals valued at $249.4 billion. Kirkland & Ellis ranked second in the high-profile public M&A advisory market while Skadden rounded out the top three.
M&A Adviser Fee Watch
As of July 1, 2019, record M&A advisory fees of $2.03 billion have already been disclosed on U.S. public deals announced during the first half of 2019. Goldman led the market with $447 million in fees disclosed. JP Morgan took second place among financial advisers. Morgan Stanley rounded out the top three in disclosed fees.
2023 Proxy Season - An Early Look at the Numbers
The trends highlighted in our June 2024 Research Spotlight (The Dramatic Rise in Asian IPO Filers) persisted throughout the second half of calendar 2024. Non-SPAC Asian issuers of IPOs on US exchanges continued to account for a much larger portion of initial filings than in the pre-pandemic period.
Record Month for Bylaw Amendments
Lawyers have been recommending U.S. reporting companies update their bylaws in response to the universal proxy card rules now in effect. Judging by the record number of bylaw changes filed in November, companies are heeding this advice.
A Review of Notice of Exempt Solicitation Filings
ESG-focused activists are increasingly using exempt solicitation filings to get their message out, and in recent years have increasingly shifted their focus toward environmental and social issues (E&S) while also escalating the pressure on subject companies.
Dual Class Sunsets
The debate over dual class share structures has been ongoing for over a century. Yet every few years, dual class structures come under increased scrutiny and criticism – usually triggered by a specific event, such as a high-profile company going public with the founder retaining a class of supervoting shares – then the increased attention fades away. Recent policy changes by proxy advisory firms begin to take effect this year, and it will be interesting to watch this proxy season and next to see if the escalated pressure on companies with dual class structures will have any material effect.
Top Takeover Defense Changes of 2021
Deal Point Data continuously monitors changes to corporate charters and bylaws and other announcements for key governance and takeover defense changes as part of our ESG research. After a unique year in which the Covid-19 pandemic upended several long term trends, 2021 largely reverted back to what we had been observing in recent years - less companies making structural takeover defense changes, lower overall governing document filings and amendments, and less poison pill activity.
Covid-19 Rights Plans ("Poison Pills") Revisited
One year removed from the Covid-19 related stock market crash and the resulting increase in the number of companies turning to poison pills, we revisit the status of these companies and plans.
Delayed 2020 Annual Meetings Impact Key 2021 Advance Notice Deadlines
Companies that delayed the holding of their 2020 annual meeting that are returning to their traditional annual meeting schedule may be impacting advance notice deadlines for proposals and director nominations. A review of advance notice provisions and a feature that can require a resetting of the submission deadlines.
Top Takeover Defense Changes of 2020
Deal Point Data continuously tracks changes to corporate charters and bylaws for key governance and takeover defense changes. The public health impact of the COVID-19 pandemic led to an increase in changes to governing documents in 2020 including numerous companies making the changes necessary to facilitate virtual shareholder meetings.
How Have Companies Responded to Delaware Supreme Court Upholding Federal Forum Provisions
A review of charter and bylaw filings in the six months since the Delaware Supreme Court upheld federal forum provisions ("FFP") shows that FFPs are becoming standard in the governing documents of IPO companies and among existing companies, an initial spike of adoptions that has steadily leveled off.
Top Takeover Defense Changes of 2019
Deal Point Data continuously tracks changes to corporate charters and bylaws for key governance and takeover defense changes. With much of the conversation surrounding corporate governance shifting away from shareholder rights to social and environmental issues, the volume of defense changes and updates to governing documents in general declined for companies of all sizes for a second year in a row.
Top Takeover Defense Changes of 2018
A review of Deal Point Data defense change and disclosure data for S&P 1500 companies in 2018 yields a few observations including governance best practices adopted by large cap companies continuing to trickle down to smaller companies, companies of all sizes are concerned with stockholder lawsuits, and absent traditional structural defenses, large cap companies are focusing on bylaw language, with very limited participation by stockholders.
Votes to Ratify Poison Pills Have Become Routine as Plans Evolve
It's hard to believe that the votes associated with what was once the most controversial item in the corporate governance landscape have become downright routine. Since January 1, 2017, 74 out of the 75 company proposals to approve a poison pill (aka a shareholder rights plan) passed and the lone proposal that was voted down comes with an asterisk because it was not a typical vote.
Peak Proxy Access Nomination Season
Governance activists waged a hard-fought battle to establish proxy access at public companies and ultimately succeeded as proxy access has been widely adopted. It is therefore rather surprising that we have yet to have a proxy access nomination go to an actual vote. If it is going to happen in the 2019 proxy season, we're likely to know soon as we've entered the part of the calendar where proxy access notice windows are opening.
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