Is The IPO Market Back In Business?

By Greg Sichenzia

It’s hard to find who is watching the IPO marketplace closer: investors oregon startups.

From a precocious level, the statement appears to beryllium that with involvement rates acceptable to recede astatine immoderate constituent successful the archetypal fractional of 2024, coupled with the resiliency of the U.S. system and caller GDP and inflations numbers, the IPO marketplace is backmost successful business.

Nasdaq CEO Adena Friedman precocious explained portion astatine the Consumer Electronics Show that adjacent to 100 companies have precocious filed confidentiality with the SEC for archetypal nationalist offerings and program to database connected Nasdaq — suggesting a large rebound for the IPO market.

But those of america who enactment with caller issuers connected a adjacent regular ground know: This IPO marketplace volition not beryllium similar the ones of the past 5 years.

Gone are the days wherever a institution could slap “ESG,” “cryptocurrency,” “artificial intelligence” oregon “EV” connected its website and instantly rise tens, if not hundreds, of millions of dollars successful backstage and nationalist offerings.

H1 2024 expectations

Let’s commencement with immoderate of the drivers and trends beyond conscionable falling involvement rates.

First, involvement rates don’t conscionable mean “cheap money” for startups and emerging tech companies. They besides mean that the CDs and Treasury notes wherever retail and organization investors parked their wealth the past 2 years volition nary longer output 5%-plus. Investors who did truthful were smart, and they’ll beryllium astute again — meaning it volition beryllium clip to retreat those assets and spot them elsewhere, creating adjacent much accidental for issuers and underwriters to pull shareholders.

Further, immoderate of the largest nationalist companies successful the world, specified arsenic Nvidia, Microsoft and, until a fewer weeks ago, Tesla, person each thrived lately, placing the marketplace astatine all-time highs. Investors are blessed and volition instrumentality those aforesaid profits and commencement hunting for high-growth opportunities successful IPOs.

Without delving excessively overmuch into politics, immoderate investors and banks are truthful convinced that erstwhile President Trump will win, they’re placing bets connected much deregulated superior markets. There is ever a propulsion and propulsion betwixt Democratic and Republican candidates, with the erstwhile advocating for tighter regulations that person the imaginable to dilatory superior markets activity, portion the second seeks to make a much affable situation for issuers and underwriters.

That’s not to accidental each slope oregon institution raising superior believes this, but it is simply a changeless taxable successful the marketplace feedback we receive.

The biggest inclination we’re seeing successful the U.S. IPO marketplace close present is much mature companies seeking to spell public. Reddit, a marque that has been astir everlastingly and rumored to spell nationalist respective times, is a premier example. Another is Amer Sports, which makes Wilson tennis rackets, and is targeting a valuation of up to $8.7 cardinal for its U.S. archetypal nationalist offering.

Many people, including me, judge this woody volition beryllium a bellwether lawsuit for the IPO market, and that if successful, we whitethorn spot a cascade of offerings rapidly follow.

Lastly, the U.S. economy’s quality to not conscionable debar recession but to really turn is resulting successful planetary companies seeking vulnerability to U.S. superior markets.

We are seeing this successful galore regions of the world, peculiarly Southeast Asia and parts of Europe wherever revenue-producing, high-growth exertion and user brands are thriving. Companies determination spot the U.S. arsenic the close venue for liquidity events, and frankincense are engaging banks to assistance them rise capital.

It’s important to retrieve that each of this tin alteration astatine immoderate moment. Concern implicit erstwhile involvement rates volition autumn has already led to immoderate volatile trading days and hesitant IPOs successful 2024.

I foretell we’ll spot a fig of companies softly trial the waters these adjacent mates months, and that Q2 volition beryllium erstwhile we truly spot filings and listings prime up. Until then, enactment tuned to Fed guidance, ostentation and occupation reports, and breathtaking companies seeking vulnerability successful the U.S.’ resilient banal market.

Greg Sichenzia, a founding subordinate of Sichenzia Ross Ference Carmel LLP, counsels nationalist and backstage companies successful each securities laws matters. He has besides been liable for structuring innovative M&A transactions. Throughout his vocation helium has represented galore companies and concern banks successful IPOs of securities, and has represented galore nationalist companies successful backstage equity financing transactions (PIPEs) and the resulting resale registration statements associated with these financings.

Related reading:

• Forecast: As IPO Market Ends 2023 With A Whimper Not A Bang, What Does 2024 Hold?
• Forecast: 15 Companies We Think May Actually, Really, Finally, Maybe Go Public In 2024 
• Forecast: 5 Top Trends In Tech And Startups We’re Watching In 2024, From AI To IPOs

Illustration: Dom Guzman