On May 10, 2017, the SEC’s Division of Economic and Risk Analysis and New York University’s Stern School of Business held a dialogue aimed at assessing the economic factors causing the recent downturn in initial public offerings (“IPOs”) in the U.S. market. Former Acting Chair and current SEC Commissioner Michael Piwowar began the dialogue, reiterating the importance of making public capital markets available to businesses. Commissioner Piwowar emphasized that a robust IPO market fosters innovation, creates jobs and provides opportunities for investors to increase wealth and mitigate risk.

Throughout the discussion, academics, regulators and industry practitioners opined on economic trends that have led to a severe decrease in IPO activity over the past fifteen years. The overall IPO activity is presently less than 1/3 of where it stood in the 1990s and 40% of current-day IPOs are undergone by large companies. Panelists agreed that regulation, including restrictions and disclosures required by Sarbanes Oxley and the JOBS Act, has had at most a minimal impact on the decline of the IPO market. Rather, through venture capital, private equity, hedge funds and mutual funds, emerging companies today enjoy a variety of options to privately grow their businesses and gain needed liquidity. Even firms desiring “exit options” can opt to pursue for strategic sales rather than entering the public market. While some industry professionals expect an uptick in IPOs as soon as this year, the time allocation, cost and risk of going public will likely continue to limit IPO activity, particularly among smaller issuers.

Commissioner Piwowar’s opening remarks at the SEC-NYU Dialogue on Securities Market Regulation: Reviving the U.S. IPO Market are available at: https://www.sec.gov/news/speech/opening-remarks-sec-nyu-dialogue-securities-market-regulation-reviving-us-ipo-market