A Look at Governance and Liquidity Arrangements in Sponsor-Backed Initial Public Offerings

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Welcome to Weil, Gotshal & Manges LLP’s survey of governance and liquidity arrangements in sponsor-backed initial public offerings (“IPOs”) in the United States. In preparing this survey, we reviewed and analyzed the material terms of 13 IPOs consummated on United States listing exchanges in calendar year 2017 by companies that had one or more private equity sponsor owner(s) (each, a “Sponsor”). The 13 surveyed transactions consisted of 6 “club” deals (i.e., a deal that has more than one Sponsor with a material ownership position in the company) and 7 single-Sponsor deals.

In this survey, we focus on the areas that we believe are of unique interest to Sponsors contemplating an IPO of one of their portfolio companies. Given that Sponsors typically retain a majority (or significant minority) of the company’s equity following an IPO, Sponsors are uniquely focused on maintaining (i) control or influence over the company while the Sponsor holds a meaningful (but decreasing) ownership interest in the public company, and (ii) the ability to sell down the Sponsor’s remaining stake in the public company at a time (and valuation) of its choosing (and without being “front run” by other major shareholders).

View the survey.