A white paper issued by Grant Thornton LLP today entitled, “Market Structure is Causing the IPO Crisis” examines the demise of initial public offerings in the United States, and offers remedies to resurrect the IPO market.
The study concludes that technological, regulatory and legislative changes have combined to chisel away at the U.S. IPO market. It finds that
Although conventional wisdom holds that the U.S. IPO market has been going through a cyclical downturn exacerbated by the recent credit crisis, the paper points out that in reality, the market for underwritten IPOs, given its current structure, is closed to 80% of the companies that need it.
“Despite the recent uptick in IPO activity, over the last several years, initial public offerings in U.S. have nearly disappeared,” noted [co-author David] Weild.
Weild states that changes in market structure are responsible for “killing the IPO goose that laid the golden egg of U.S. economic growth.”