While 2010 represented a modest improvement for mergers and acquisitions, the market for initial public offerings surged back to life, as domestic IPO activity eclipsed the previous two years, according to a report from PricewaterhouseCoopers.
Year to date, issuers completed 154 IPOs in the U.S., raising a total of $37.5 billion. The number of floatations more than doubled the 69 offerings last year, while the value was a 49% increase. The robust fourth quarter represented the highest amount of deal volume since 2007.
PwC attributed the surge to financial sponsor-backed offerings and non-U.S. issuers, which contributed nearly half of the quarterly activity. The IPO market regained its footing in the fourth quarter following a slump in the summer in the wake of the flash crash that unsettled investor sentiment. At the mid-point of December, the fourth quarter had 55 IPOs against just two withdrawn offerings. Forty of the new offerings came from sponsor-backed companies, which for the year produced 123 IPOs, representing 80% of the total volume.
Scott Gehsmann, a capital markets partner in PwC's transaction services practices, predicts that this momentum will carry over into next year. "We expect financial sponsors to again be a major player in the IPO market in 2011, though other deal channels are improving and providing attractive monetization opportunities," he said.
Ken MacFadyen is editor of Mergers & Acquisitions Journal.