Over the last several years, the IPO market in the United States has practically disappeared. Just 12 companies went public in the United States in the first half of 2009, and only eight of them were U.S. companies. Is the U.S. IPO market going through a cyclical downturn exacerbated by the recent credit crisis, or is today’s market structure failing the IPO?
A “perfect storm” of events pressures small IPOs as the number of transactions falls markedly.*
From 1991 to 1997 nearly 80% of the IPOs were smaller than $50 million. By 2000 the number of sub-$50 million IPOs had declined to only 20% of the market. The market for underwritten IPOs, given its current structure, is closed to 80% of the companies that need it.
Market structure is causing the IPO crisis explores lessons learned, the IPO crisis, and Grant Thornton LLP’s ideas for an issuer and investor opt-in capital market structure that is conducive to capital formation and favors small, mid and large cap companies.
*Source: Dealogic, Capital Markets Advisory Partners. Data includes corporate IPOs as of 06/30/09, excluding funds, REITs, SPACS and LPs.
