New York, NY – No one can disagree that over the past few years, the U.S. IPO market has shriveled up to a fraction of its former size. Some argue that this has taken place for regulatory reasons, saying that regulations like Sarbanes Oxley have made the U.S. capital markets uncompetitive with foreign markets like the UK or Canada. Others say we are merely experiencing a cyclical downturn, and that once we are through the current financial crisis, IPOs will come roaring back. However, a few argue that the US IPO market is closed to many of the participants who need it most – U.S. small capitalization companies.
The following is an excerpt of a recent white paper titled “Why are IPOs in the ICU?“, published by international auditing firm, Grant Thornton, and co-authored by David Weild and Edward Kim that addresses this topic. The following excerpt covers the reasons for the decline in the US IPO market.
David Weild is an Advisor to Grant Thornton and the clients of Grant Thornton in Capital Markets. He is the founder of Capital Markets Advisory Partners and the former vice-chairman and executive vice-president overseeing the more than 4,000 listed companies of The NASDAQ Stock Market. David spent 14 years in a variety of senior investment banking and equity capital markets roles at Prudential Securities. He was recently invited to participate in NYSE’s and National Venture Capital Association’s Blue Ribbon Regional Task Force to explore ways to help restore a vibrant IPO market and keep innovation flourishing in the United States. He also serves as Director of the National Investor Relations Institute’s (NIRI) New York chapter.
Edward Kim is an Advisor to Grant Thornton and the clients of Grant Thornton in Capital Markets. He was head of product development at The NASDAQ Stock Market and has worked in equity research at Robertson Stephens, equity trading at Lehman Brothers and investment banking at Prudential Securities.