I’ve lived through both the highest highs and lowest lows of the IPO market since I first began working in Silicon Valley in the late 1990s. I’ve experienced both the manic days of the dot-com boom’s seemingly daily S-1 filings (remember Pets.com and Webvan?) and the darkest days of the Great Recession (and everything in between).
More recently, due to a variety of economic and political factors, we’ve seen somewhat of a pause in the IPO market. According to a recent Harvard Law School 2017 IPO report, the IPO market produced 98 IPOs in 2016, the second down year in a row, coming in 36 percent below the tally of 152 IPOs in 2015. In the 12 years preceding 2015, which saw an annual average of 138 IPOs, there were only three years in which IPO totals failed to reach the 100-IPO threshold.
Nonetheless, the U.S. capital markets maintain sustained strength. Public markets hover around record highs, and the pool of venture-capital-backed IPO candidates remains large and opportunistic, including about 150 private tech companies valued at $1 billion or more. Private equity firms are also sitting on record levels of committed capital after four consecutive years of increased fundraising. Combined with solid 2016 performance of VC-backed IPOs and the need of private equity firms to utilise their reserves, all the pieces are in place for increased future IPO demand. As of August 2017, there had already been over 100 IPOs priced in 2017.
Discover more: IPO readiness: preparation makes going public less taxing
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With a return of normalised IPO market conditions, more private companies will likely seek public status as we move into 2018. Given the complexities, time constraints and significantly heightened public and regulatory scrutiny facing public companies, it is important that a private company begin acting public with respect to its tax accounting management well in advance of an IPO.
