Nationwide, investment bankers are predicting slow growth in U.S. IPO activity this year, with only a six percent increase in activity, according to BDO’s 2013 IPO Outlook Study.
This measured response comes after a quiet 2012 – where, absent the Facebook offering – the size of the average IPO in 2012 was considerably smaller than 2011, and the proceeds would have been the lowest since the height of the financial crisis in 2009.
Nationally, the most frequently cited factors for a tempered IPO market in 2012 were valuation pressures that forced offering businesses to cut prices (47%), smaller businesses pursuing offerings (31%) and companies offering a smaller percentage of the business in the deal (13%).
Looking to 2013, more than a third (37%) of capital markets executives cite the threat of tax increases and government spending cuts as a deterrent to a healthy U.S. IPO market this year.
Unfortunately, provisions in the 2012-enacted JOBS Act to make the IPO process less cumbersome for smaller companies has received mixed reviews from investment bankers. To date, 42 percent of survey respondents see no evidence that the new law is positively impacting IPOs.
A bright spot for DC is that two-thirds of the investment banking community predicts a continued increase in offerings in the healthcare (69%), technology (67%) and biotech (67%) verticals – important industries to the local economy.
D.C.’s own Living Social, a high profile tech startup backed by Steve Case, will be a company to watch for a 2013 IPO, despite shelving its initial IPO plans after raising $176 million in a private offering during a funding round to raise $400 million in late 2011.
For more information on the BDO Study, please download the report at http://www.bdo.com/download/2432.