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By David Braun, Founder and CEO, Capstone Strategic When Washington DC based restaurant chain Cava became a publicly traded company recently, it bucked a trend that has lasted nearly two years, a notable absence of American IPOs. The past 18 months have marked the slowest initialpublicoffering market since the financial crisis of 2008.
SPACs are publicly traded companies that raise capital through an initialpublicoffering (IPO) with the primary aim of acquiring an existing private company, thereby enabling it to go public without undergoing the traditional IPO process.
These communities have shown at times that their investment decisions are not just guided by financial returns, but other corporate governance factors as well. This concern multiplies as the rise of retail investing communities continue to increase both market volatility and public scrutiny. Private Companies. Conclusion.
In the face of a global economic slowdown, ongoing trade wars, Brexit, heightened market volatility and other sources of uncertainty, it is becoming increasingly important to consider how deals can be run to maximize transaction certainty and achieve optimal valuation. Having the necessary infrastructure is also key. What’s the time frame?
Although there were 104 initialpublicofferings of biotechnology companies in 2021 that raised nearly $15 billion in funds, 2022 saw only 22 such IPOs collectively raising less than $2 billion. Novartis announced plans to spin off its generics and biosimilars division into a publicly traded stand-alone company.
These developments may ratchet up the pressure on target boards to dismantle structural governance protections, modify their capital allocation policies or pursue divestitures of non-core businesses.
This approach, combining M&A and initialpublicoffering (IPO) preparations on parallel tracks, allows companies to maximize optionality in an uncertain market. Indeed, while several deals drew extended reviews, multiple other large life sciences transactions cleared Hart-Scott-Rodino review with limited to no scrutiny.
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