Two Hands better than One: An Analysis of Sole-book and Joint-book VC-backed IPO Transactions

Methodology
The study includes all US VC-backed IPOs from Q1 2010 to approximately Q1 2013. The data is sourced from VentureSource. A VC-backed company is defined as a company that has received funding from at least one institutionalized venture capital firm.

Only IPOs launched on major US stock exchanges are included (NASDAQ and NYSE)
% change in price is calculated as the change between the daily last reported price and the securitys offering price . 60-D volatility refers to the 60-D volatility metric for each security, measured at 60 trading days out from the initial IPO date. All trading data are sourced from Bloomberg

Conclusion
IPO transactions led by sole-book running managers tend to fully better priced than their counterparts, by about average of 15%. However, sole-led transactions tend to have more volatility and worse overall performance.

Overall, companies continue to prefer joint-led over the sole-led structure.

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Combined (2010-2013 Q1)

Average % Change in Price
40%

35%

30%

25%

20%

Sole Joint

15%

10%

5%

0%

# of Transactions Joint Sole 105 12

Average % Change in Price Joint Sole 31% 15%

Average of Volume as % of Float Joint Sole 74% 46%

60-D Volatility Joint Sole 61.2 72.5

Method: Unweighted average of price changes. Daily last reported price is anchored against the securitys offering price. Volatility refers to the 60-day volatility metric for each security Source: VentureSource, Bloomberg

2010 IPOs
Average % Change in Price
30%

25%

20%

15% Sole Joint 10%

5%

0%

-5%

# of Transactions Joint Sole 30 4

Average % Change in Price Joint Sole 11% 12%

Average of Volume as % of Float Joint Sole 52% 53%

60-D Volatility Joint Sole 61.3 69.3

Method: Unweighted average of price changes. Daily last reported price is anchored against the securitys offering price. Volatility refers to the 60-day volatility metric for each security Source: VentureSource, Bloomberg

2011 IPOs
Average % Change in Price
50%

45% 40% 35% 30% 25% 20%

15% 10%

Sole Joint

5% 0%

# of Transactions Joint Sole 29 5

Average % Change in Price Joint Sole 32% 29%

Average of Volume as % of Float Joint Sole 83% 44%

60-D Volatility Joint Sole 84.5 95.1

Method: Unweighted average of price changes. Daily last reported price is anchored against the securitys offering price. Volatility refers to the 60-day volatility metric for each security Source: VentureSource, Bloomberg

2012 IPOs
Average % Change in Price
50%

40%

30%

20% Sole Joint 10%

0%

-10%

-20%

# of Transactions Sole Joint 2 37

Average % Change in Price Sole Joint -2% 32%

Average of Volume as % of Float Joint Sole 80% 55%

60-D Volatility Joint Sole 40.5 43.3

Method: Unweighted average of price changes. Daily last reported price is anchored against the securitys offering price. Volatility refers to the 60-day volatility metric for each security Source: VentureSource, Bloomberg

2013 YTD IPOs

Average % Change in Price
40%

30%

20%

10% Sole

Joint 0%

-10%

-20%

-30%

# of Transactions Joint Sole 9 1

Average % Change in Price Joint Sole 23% -18%

Average of Volume as % of Float Joint Sole 75% 12%

60-D Volatility Joint Sole 75.3 29.8

Method: Unweighted average of price changes. Daily last reported price is anchored against the securitys offering price. Volatility refers to the 60-day volatility metric for each security Only 2013 IPOs with sufficient trading data are included, the cut-off date is approximately March 30th, 2013. Source: VentureSource, Bloomberg

Joint

Sole