Here are highlights from our Q2 2011 Active Insights Quarterly report:
We provide research coverage and/or market-making for 30 active lifestyle companies, including these action sports and outdoor companies: Deckers Outdoor, Big 5 Sporting Goods, Dick’s Sporting Goods, Lululemon Athletica, Nike, Urban Outfitters, Pacific Sunwear, VF Corporation, Columbia Sportswear, Quiksilver and Zumiez.
Solid Active Lifestyle IPO Backlog – The last IPO on a U.S. exchange in the Active Lifestyle sector was Lululemon Athletica in July 2007; however, there are three large IPOs in registration waiting to price:
• Skullcandy, an action sports headphone provider, filed its S-1 in January and is looking to raise $125 million;
• SRAM, a premium bicycle components manufacturer, filed its S-1 in May and is looking to raise $300 million; and
• Tilly’s, an action sports retailer, filed its S-1 in July and is looking to raise $100 million.
Shifts in Public Markets – Over the past decade, the IPO markets have experienced substantial structural changes that have made it more challenging for private companies to go public. In addition, the added compliance obligations associated with operating a public company have made IPOs a less attractive alternative for smaller, privately-held companies. As a result, there are dramatically fewer IPOs today than there were a decade ago, for example, from 1991 to 2000, there were 5,330 IPOs in the U.S., and from 2001 to 2010, there were 1,280 IPOs.
In recent years, private secondary markets, such as SecondMarket and SharesPost, have emerged as alternatives to the traditional public equity markets. While such private secondary markets do not provide the same levels of liquidity as traditional public markets, they do provide qualified investors with greater access to equity investments in venture capital-backed, rapidly growing emerging non-public companies without the corresponding costs associated with structuring privately negotiated investments.
Such markets may also provide a ready avenue to dispose of equity investments in privately-held companies when appropriate, as well as a more reliable means of determining the value of such equity investments. Overall, this is an interesting emergence of private secondary markets and we look forward to seeing what opportunities arise for smaller companies with strong growth prospects.
D.A. Davidson publishes this commentary to provide industry decision makers with relevant economic and market information in an accessible format. Please notify us if you would like additional information or if we can be of assistance with helping you raise capital or assisting in mergers or acquisitions.
Please contact us if you would like a full copy of the 6-page report.
Sam Orme is a Principal in Investment Banking for D.A. Davidson & Co. He has extensive experience working on a variety of investment banking transactions including mergers and acquisitions, public offerings, and private equity transactions. Companies he has worked with include American Sporting Goods, Volcom, Leatherman, Nautilus, PayPal.com, Ask.com, E*Trade.com, Teva/Ugg, Crocs, Cargill, Corporate Express, and Mitsui, as well as numerous financial buyout groups.
