We’ve known for a while that companies have been staying private longer and raising lots of capital along the way. The recent report from the SEC’s Office of the Advocate for Small Business Capital Formation confirmed that once again. The Staff found:

– The number of comapnies remaining private eight years or more after receiving their first VC round had quadrupled from 2014 to 2024, and

– 45% of unicorns are 9+ years old.

But hope springs eternal, and 2026 may be the year when more of them (finally, hopefully) move forward with a public debut.

These mega deals bring a different dynamic to the table when it comes to structuring the IPO and everything that goes into it. For example, this article from The Information gives a reminder that “innovative” lockups are on the table. Here’s an excerpt:

At least two large banks largely ruled out a standard IPO lockup period of either 90 to 180 days and are discussing how to design a staggered lockup release for the companies.
. . .
One option is staggering the dates to prevent a wave of selling on one day. IPO bankers and lawyers said investors could be allowed to sell a portion of their holdings every 20 to 30 days. Releases can also be triggered when the stock hits a certain price, they said.

The article notes that some companies that are believed to be in the pipeline have raised tens of billions of dollars privately. So, banks are looking to mitigate the risk of a mass selloff while also giving key insiders a path to liquidity.

Lockup variations aren’t unprecedented. Overall, underwriters have gotten more comfortable with early release mechanisms and see them as a tool to help with public float – e.g., early release based on stock price performance (as noted above), accommodating a release if the lockup is set to expire during a quarterly blackout period, or both. But there are still sensitivities, especially close to the IPO. Keep in mind that immediate sales might have collateral impacts on Section 11 liability as well – which is something I blogged about a few years ago in the lockup context. Meredith gave an update last summer on where this theory stands.

– Liz Dunshee