Several local companies sprinted to the stock exchange shortly after filing for an initial public offering this year, matching the national pace of just over 50 days, according to a report by PwC in New York.
Irvine-based analytics software maker Alteryx Inc. filed for an IPO on Feb. 27 and began trading on the New York Stock Exchange on March 24.
Newport Beach-based ADOMANI Inc., which converts school buses and other fleets into zero-emission electric and hybrid vehicles, was listed on the Nasdaq Capital Market on July 6 after filing in late April.
Veritone Inc., also in Newport Beach, filed on March 15, and began trading on May 12. San Juan Capistrano-based Emerald Expositions LLC was the speediest of the bunch—its IPO was filed with the Securities and Exchange Commission on April 3, and 20 days later it started trading on the New York Stock Exchange under the ticker symbol EEX.
Then there are the late bloomers.
Irvine-based startup ShiftPixy announced plans to go public in October, and began trading on June 30. FivePoint Communities Inc., the Aliso Viejo-based real estate developer that’s running Irvine’s Great Park Neighborhoods and other large housing projects in the state, completed its IPO on May 10, raising nearly $300 million. It was a renewed push at going public—FivePoint filed a draft IPO registration in July 2015 but refiled it nearly two years later on April 10.
Advantage Solutions Inc. has yet to go public some five months after filing for an IPO. And if and it debuts, it’s poised to get one of the largest valuations for an Orange County IPO in recent years.
The Irvine-based provider of sales, marketing, merchandising and digital technology services for packaged goods manufacturers and retailers has 120 offices and more than 45,000 employees, 14,000 of them full timers. Its competitors include Acosta Inc. in Jacksonville, Fla., and Crossmark in Plano, Texas, both privately held.
Last year Advantage posted net income of $31.2 million and a 10.8% increase in revenue to $2.1 billion. Its total debt is $2.74 billion and includes $1.8 billion used to finance its $4.2 billion buyout in 2014 by Los Angeles-based private equity firm Leonard Green & Partners LP and CVC Capital Partners in Luxembourg.
According to industry experts who compared Advantage to similar companies and used an industry average price-to-sales ratio of 2:1, its valuation could be $3 billion to $4 billion. However, its debt will push that down substantially, even below $1 billion. Its market cap will also depend on the volatility of the market and appetite for IPOs when the company is finally listed on the NYSE, as well as investors’ affinity to this offering.
Advantage’s stretch between public filing and pricing appears to fall within the expected time frame.
“Sometimes it’s better to take your time to position your company correctly and have a successful IPO than try to rush,” said Fadel Lawandy, director of the Hoag Center for Real Estate and Finance at Chapman University. “If you’re a private company, the only way that I can value that company is based on its financials— I look at its revenue, look at its profits, look at its profit margins, look at the gross potential for the company, and come up with a price. If you’re publically traded, your price, your value irrespective of your balance sheet is whatever the market is willing to pay for it. So if the market is willing to pay for you less than what your true value on the paper is, now you’re an undervalued company and you’ve done your shareholders a disservice. Smart companies take their time to have a successful IPO.”
Holdups can include several 30-day reviews by the SEC, issues with public holdings, lack of experience of the management team in taking the company public, and consideration of market conditions.
“It just depends on how complicated the business is,” Lawandy said. “Once they have their final prospectus, they then go out to the market and get price indication on the stock … A lot of companies do a lot of legwork before they announce they’ll do an IPO.”
Advantage’s main IPO underwriters are Morgan Stanley and Goldman, Sachs & Co., investment banks that usually don’t “take a company as a client for an IPO if they don’t know that they can be successful,” Lawandy said.
Company officials, its private-equity owners and underwriters didn’t respond to requests for comment on the pending public offering.
Also on the OC IPO deck—Hancock Jaffe Laboratories Inc., an Irvine-based medical device maker looking to raise $15 million.
Nationwide, 121 companies have gone public this year, raising $31.2 billion. That’s up from 102 deals last year that raised $21.6 billion, according to PwC.
OC’s IPO tally is so far about $632 million raised by six companies.
