The year that was: From feast to famine
After a Year of Feast, a Year of Famine. And so it was. In 2022, just 71 IPOs closed. Only $7.7 billion was raised. Average deal size sank to $20 million. Compared to the gorging of 2021 – 397 deals, $142.4 billion raised, and a median deal size of $176 million – the past year left those with an appetite for IPOs and public exits more than hungry1.
The causes of the famine are obvious – investors were cautious about the state of the global economy. Interest rates were rising rapidly. Valuations were declining. Those IPOs that did emerge lost their investors an average of 31 percent by year end1. This was not the year for a public market exit.
Unfortunately, many of the deals that were brought to the market in 2022 did more to add volatility than reduce it. Small issuers accounted for nearly three-quarters of IPOs. Of the 10 worst-performing IPOs, half saw first-day pops of more than 250 percent before ending the year down 88 percent or more from initial offering. All had deal sizes valued at less than $40 million1.
“No one will take their company public in an unstable market – there are just too many risks. When the market does stabilize, likely not til late in 2023, there are numerous companies ready to go – including some very strong ones. Let’s hope they are the ones that are first out of the next IPO window – only thing worse than no IPOs are bad IPOs.”
Conor Moore, National Leader, KPMG Private Enterprise