Wave Of IPOs Could Hit Global Markets Within The Next 12 Months by Reed Smith

According to a new study by global law firm Reed Smith and Mergermarket, Taking Stock: Going Public in Volatile Times, North American executives are confident of a return to previous highs in initial public offering (IPO) activity within the next year. The survey of 100 executives found that more than three-quarters (76 %) of North American CEOs, CFOs and heads of strategy surveyed believe that within 12 months, IPO activity will return to previous high levels, such as those seen in 2013 and 2014.

Some key findings from the report include:

  • 58% of global executives believe that IPO activity will return to previous levels within 12 months despite current market volatility
  • 68% have a strategy in place to mitigate the challenge of executing an IPO in the near term
  • 64% plan to be ready to move quickly when an IPO window opens despite market volatility

IPOs

New Survey Reveals Wave Of IPOs Could Hit Global Markets Within The Next 12 Months

Survey of 100 Executives Finds Cause for Optimism Despite Volatility.

NEW YORK (September 8, 2016) – North American executives are confident of a return to previous highs in initial public offering (IPO) activity within the next year, according to a new report. The survey of senior executives, Taking Stock: Going Public in Volatile Times, by global law firm Reed Smith – in partnership with Mergermarket – found that more than three-quarters (76 %) of North American CEOs, CFOs and heads of strategy surveyed believe that within 12 months, IPO activity will return to previous high levels, such as those seen in 2013 and 2014.

IPOs

“There is pent-up issuer-side demand to go public,” said Herb Kozlov, Reed Smith’s global corporate head.  “As issuers become more realistic and more comfortable with valuations, and factor in the advantages of going public rather than remaining private, there will be increased interest in accessing the public markets.” The challenge, Kozlov added, is for IPO investor-side demand to catch up.

The report, developed from extensive survey responses during the period April through May 2016, assesses recent volatility in the capital markets, how companies are preparing themselves to launch IPOs when markets become receptive, and the post-IPO challenges companies may face.

IPOs

“Investor appetite for IPOs has dulled considerably over the last 12 months,” says Nick Cheek, global managing editor at Remark, the publishing and events division of the Mergermarket Group. “Global IPO volume fell by 38% from a H1 2015 total of 544 to just 339 in H1 2016.”

IPOs

Cheek adds: “The reasons for the decline have been well documented – uncertainty surrounding the outcomes of both the 2016 US election and the UK’s EU referendum – where the leave result has only succeeded in ratcheting up the volatility. Yet despite the uncertainty, the results of our survey suggest that companies globally are optimistic about the future direction of activity.”

IPOs

When it comes to post-IPO challenges, 59% of respondents cited greater public scrutiny among their top three reservations, while nearly half (49%) said concern about their stock being subject to market volatility ranked in the top three. Short-termism, shareholder pressure and the risk of litigation also ranked high in the list of reservations about being a publicly listed company.

About Taking Stock: Going Public in Volatile Times

Taking Stock: Going Public in Volatile Times is the third in a series of four reports in Reed Smith’s Deal Dimensions series. For the report, Mergermarket surveyed 100 respondents (CEOs, CFOs and heads of strategy) employed by privately held companies across Asia-Pacific, North America and Europe. All 100 companies were considering an IPO within the next three years.

Read the full report here.