Last week, BDO USA released its 2015 IPO Halftime Report which surveyed capital markets executives from various investment banks on IPO activity and trends for 2015. The report found that the number of U.S. IPOs and aggregate proceeds are down significantly when compared to the same period in 2014 and notes that predictions point toward a similar volume of offerings in the second half of 2015. While there are many contributing factors to this decrease in number of offerings and proceeds raised, a majority (56%) of the capital markets executives surveyed believe that the availability of private funding at favorable valuations is a principal cause, particularly for technology companies.
In addition to the drop in number of IPOs in the first half of 2015, the average size of offerings has decreased as well when compared to 2014. A significant portion (41%) of the executives surveyed attributed this decline in average deal size to fewer large deals coming from private equity and venture capital firms who have already exited many mature businesses. Only 6% of those surveyed believed the JOBS Act contributed to the decrease in average offering size.
Capital markets executives are still divided on the impact of the three-year old JOBS Act on the IPO market. Accordingly, a slight majority (51%) of those surveyed believed the Act has had a positive impact on companies going public. However, when compared to the percentage of bankers who felt this way two years ago (14%), this majority represents a significant change in sentiment towards the JOBS Act. Despite this attitude shift, a majority of executives felt that the JOBS Act’s confidential filing process and corresponding lack of transparency has had a negative impact on their capability to advise clients resulting from a lack of knowledge about competing offerings.
For the second half of 2015, the report indicates an expected increase in healthcare, technology and biotech IPOs and cited private equity firms and venture capital portfolios are cited as the primary source of IPOs. For these and other findings, the full report can be accessed here.