DAGEN: THE GOVERNMENT SHUTDOWN
NOW TIED FOR THE LONGEST IN THE
NATION'S HISTORY.
TOMORROW IT WILL BE THE LONGEST
IF IT LASTS.
AND IT COULD DELAY IPOs IN P
2019 IN THE NEW YEAR.
JOINING US NOW, PWC PARTNER,
HEAD OF FINANCIAL SERVICES NEIL
DART.
GREAT OF YOU TO BE HERE.
WHAT'S THE IMPACT RIGHT NOW?
>> RIGHT NOW IT'S VERY DIFFICULT
TO GET AN IPO OUT IN THE
MARKETPLACE BECAUSE YOU NEED A
REGULATOR TO SIGN OFF ON THE
DOCUMENT.
THERE IS NO REGULATOR AT THE
MOMENT.
OTHER THAN EMERGENCY THINGS.
SO WHAT WE'RE SEEING IS DECEMBER
HAD A LOT OF VOLATILITY IN THE
MARKETPLACE.
SO IT WAS VERY SLOW FROM AN IPO
STANDPOINT.
NOW, WE'RE NOT GOING TO HE SEE
MANY THINGS, BASICALLY WHAT
HAPPENS IN JANUARY IS IF YOU
DON'T GET IPOs OUT
IMMEDIATELY, THEN FOLKS WILL
WAIT FOR YEAR-END EARNINGS.
DAGEN: SO ISN'T THIS IS A
BLESSING FOR THESE COMPANIES,
THOUGH, IN SOME WAY?
BECAUSE IT GIVES THEM COVER.
KATHLEEN SMITH, WHO RESEARCHES
IPOs, WAS ON THIS PROGRAM AND
SHE THOUGHT THE MARKET WAS SO
ROTTEN AT THE END OF THE YEAR
THAT IT COULD BE CLOSED FOR
IPOs AT LEAST IN THE FIRST
QUARTER SO IT GIVES THEM A
LITTLE BIT OF COVER TO TAKE SOME
TIME AND WAIT FOR THE MARKET TO
RECOVER.
DO YOU AGREE WITH THAT?
>> I THINK 2018 WAS A VERY GOOD
YEAR FOR IPOs.
THERE WAS 215 IPOs.
USUALLY ANYTHING OVER 200 WE
BELIEVE IS A STRONG YEAR.
SO WE HAD THAT MOMENTUM.
YOU'RE RIGHT, THINGS DID SLOW
DOWN AT THE BACK END OF THE
YEAR.
VOLATILITY IS USUALLY A VERY BIG
PAIN POINT.
DAGEN: SHE WAS REALLY TALKING
ABOUT THE PERFORMANCE IN THE
SECOND HALF OF THE YEAR, THE
COMPANIES THAT DID GO PUBLIC.
>> WE DID SEE THAT.
WE DID SEE A DROP IN RELATION TO
THE IPOs THAT WENT OUT AT THE
BEGINNING OF THE YEAR, TRADED UP
VERSUS THE ONE THAT'S CAME OUT
AT THE BACK END.
>> I THINK WHAT YOU SAID,
VOLATILITY IS THE KEY POINT.
WE HAVE VOLATILITY WITH THE
GOVERNMENT SHUTDOWN, WITH
GEOPOLITICAL RISK, WITH TRADE,
WITH TAX 1.0 VERSUS 2.0, WITH
FISCAL, WITH FED.
AND A COMPANY, WE CAN LIVE ON
GOOD AND/OR BAD NEWS.
WHAT WE STRUGGLE WITH IS WHEN WE
HAVE NO IDEA WHAT THE FUTURE MAY
BE, WHICH IS WHY THE GOVERNMENT
SHUTDOWN, THE IDEA WE HAVE
REGULATORS NOT ABLE TO WORK, WE
HAVE THE FDA NOT ABLE TO WORK,
THIS IMPACTS ALL COMPANIES,
WHETHER GOING INTO EARNINGS
SEASON OR IPO SEASON OR RETAIL
SALES.
ARE WE GOING TO GET THE RIGHT
NUMBERS.
WHAT DO YOU TELL YOUR CUSTOMERS
HOW TO DEAL WITH THIS WHOLE
VOLATILE SITUATION.
>> THERE'S CERTAIN THINGS YOU
CAN CONTROL, CERTAIN THINGS YOU
CAN'T.
WHAT WE SEE FROM AN IPO TO BE
STRONG IN THE MARKETPLACE, GOOD
MANAGEMENT, STRONG GROWTH,
STRONG CASH FLOWS, THAT'S WHAT
THEY CAN CONTROL FROM A STORY
STAND.
THE OTHER STUFF, YOU HAVE TO BE
READY AND ONE OF THE THINGS THAT
WE PREACH AS WE HELP OUR CLIENTS
THINK THROUGH THIS STUFF IS
YOU'VE TO BE READY -- AN IPO IS
A NINE TO 12 MONTH PROCESS TO
GET READY.
YOU NEVER KNOW WHAT WILL HAPPEN
IN A MARKETPLACE AND WHEN YOU
CAN DIP IN IN A FAVORABLE
MOMENT.
>> ON IPOs, 81% -- I SAW A
STAT FROM THE UNIVERSITY OF
FLORIDA-THIS YEAR WERE
UNPROFITABLE COMPANIES.
THAT RIVALS 2000 WHEN WE WERE IN
THE DOT-COM BUBBLE.
WHAT DOES THAT SIGNAL ABOUT
WHERE WE ARE IN THE CYCLE OF
IPOs OR MAYBE EVEN IN THE
BUSINESS CYCLE.
>> WE'VE SEEN -- IPOs COME IN
A LOT OF DIFFERENT FLAVORS.
YOU HAVE CASH STABLE COMPANIES,
A LOT OF THE SPONSOR BACKED
COMPANIES ARE CASH STABLE
COMPANIES.
WE HAVE SEEN A BIG UPTICK IN
RELATION TO GET AND PHARMA, LIFE
SCIENCES IPOs.
THOSE COMPANIES WILL HAVE THAT
TYPE OF PROFILE, STRONG REVENUE
GROWTH, BUT POTENTIALLY
LOSS-MAKING TYPE OF COMPANIES.
DAGEN: AT LEAST IT DOESN'T
SMACK OF THE SAME TYPE OF
COMPANIES THAT WERE GOING PUBLIC
BACK IN 2000, COMPANIES THAT
JUST SEEMED REALLY RIDICULOUS
THAT BARELY HAD A BUSINESS PLAN.
I DON'T THINK THAT -- AT LEAST I
DON'T GET THE SAME SENSATION.
>> THERE'S A LOT MORE DILIGENCE
IN RELATION TO WHAT THE
INVESTORS ARE ASKING FOR, WHAT
COMPANIES ARE BEING ASKED ON THE
ROAD SHOWS, THE LEVEL OF
DILIGENCE FEELS DIFFERENT,
AGREE.
DAGEN: GOOD TO SEE YOU.