Managing Director & Senior Partner; Global Leader of Mergers & Acquisitions
One of the early casualties of the financial crisis that began in the autumn of 2007 was the global market for initial public offerings (IPOs). The number of companies making their debut on public stock markets plummeted in 2008, falling even below the depths plumbed during the dot-com bust in the early years of the decade. The average value of IPOs also fell sharply as confidence ebbed and stock prices fell.
The IPO market bottomed out in 2009, as did the global economy and stock markets around the world. Then, the number of IPOs more than doubled in 2010, a recovery that appeared to continue into the first half of 2011. But during the summer months, the continuing failure to resolve the sovereign debt crisis in Europe and growing fears about the strength of the global economic recovery interrupted the upward trend, casting gloom over the prospects for IPOs in the rest of 2011 and into 2012—and perhaps beyond. Companies that were ready to launch their IPOs and private-equity firms that were seeking exits from successful turnarounds were forced to put their plans on hold. Casualties include the flotations of Osram, the lamps and lighting systems manufacturer, by Siemens and of Evonik, the German chemicals maker.
Yet, although the market environment turned hostile to IPOs once again and remains so in the autumn of 2011, now is the time when ambitious companies should be planning their stock market listings. As this report will demonstrate, many months of careful preparations are required to launch a successful IPO. Companies that invest in those preparations during adverse market periods will be first in the queue when prospects improve.
Businesses from outside Asia that are planning an IPO or a secondary listing (a cross-listing) in the region should consider the pros and cons.
Based on a comprehensive survey of more than 1,000 European IPOs, this report will help companies navigate their way through complex decisions about where and when to make their stock market debut, how much equity to issue, and how to price the offer. It looks at how nearly half the companies in the survey have subsequently returned to the stock markets at least once through a secondary public offering (SPO). And an appendix examines the pros and cons of IPOs and secondary listings on Asian stock exchanges by companies from outside the region.
The report also sets out the extensive preparations needed to ensure that IPOs succeed and that companies perform strongly once they are listed on a stock market. The experience of 2011 has shown that favorable windows of opportunity may not remain open long enough for companies to wait until markets recover to prepare for a listing. While IPOs may have to wait until the gloom hanging over the markets lifts, this is not a time to hunker down.
The authors would like to thank Uwe Berberich, Blas Bracamonte, and Florian Mezger for their extensive support.