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ARTICLE · 07 DECEMBER 2021

Dual-Class Stock IPOs

Mayer Brown
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In their dataset and working paper, titled The Rise of Dual-Class Stock IPOs, Dhruv Aggarwal, Ofer Eldar, Yael Hochberg, and Lubomir P. Litov...

United StatesCorporate/Commercial Law
Nicole Veru
Nicole Veru
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In their dataset and working paper, titled The Rise of Dual-Class Stock IPOs, Dhruv Aggarwal, Ofer Eldar, Yael Hochberg, and Lubomir P. Litov, find that the rise in the number of dual-class IPOs is tied to the increase in bargaining power of founders. In recent years, before 2019, the public markets saw a decrease in public companies but an increase in the number of companies electing to go public using a dual-class stock structure, especially companies in the technology sector, including, for example, Google, Facebook, and Snap. Additionally, almost half of IPOs in recent years raised financing through VC investment. To analyze the changing public markets, the authors review a full sample of IPOs completed from 1994-2019, for a total of 5,760 IPOs, 614 of which are dual-class IPOs. Notably, they identify a range of dual-class structures: those controlled by founders, parent and holding companies, directors and officers (non-founders), and VC firms. They compute the

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