Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, companies
Speaker 1: last year defied the pandemic to go public at a
Speaker 1: record pace. Fast forward to this year, things look quite
Speaker 1: a bit different. We've got market volatility, we've got inflation,
Speaker 1: and fears of a downturn brought an abrupt end to
Speaker 1: the listing party. Check these numbers out, Katie. Companies have
Speaker 1: raised to combine four point nine billion dollars via US
Speaker 1: I p o s this year, less than six percent
Speaker 1: of the record some raised in the first half. That's
Speaker 1: according to data compiled by Bloomberg. So there's been quite
Speaker 1: a drought. Rachel Garring is I p O leader at
Speaker 1: e Y America. As Rachel joins us on the phone
Speaker 1: from Nashville, Tennessee, Rachel, how are you. I'm great, Thank you, Well,
Speaker 1: it's good to have you with us. What do you
Speaker 1: make of the downturn that we've seen in I p
Speaker 1: O s this year? When does it turn around? Well,
Speaker 1: that's a great question. Um. We are definitely an a
Speaker 1: wait and see period right now by both companies and
Speaker 1: issuers for all the reasons you just mentioned, right, rising
Speaker 1: interest rates, insulation, supply chain disruptions, continued workforce destructions, and
Speaker 1: access to talent. We've got valuations kind of correcting themselves
Speaker 1: from the highs. And then you know, the overall performance
Speaker 1: of the I p O classes is far below the
Speaker 1: overall market, so that doesn't bode well. Um, And why
Speaker 1: we're seeing kind of that that pause right now that
Speaker 1: we're experiencing and companies preparing on the sidelines. Um. I
Speaker 1: think moving forward, we're going to see new issuers come
Speaker 1: to market that have both a strong growth and profitability story.
Speaker 1: And Rachel, I mean, is it fair to say that
Speaker 1: there's companies in the pipeline, in the I p O pipeline,
Speaker 1: but they're just waiting out the market conditions. Absolutely. I
Speaker 1: think there's a lot of companies who still have a
Speaker 1: strong interest in I p O s. It's not a
Speaker 1: matter of if, it's just a matter of when. So
Speaker 1: they're navigating through these uncharted waters uh currently um, and
Speaker 1: also waiting for investors to be back interested in this
Speaker 1: asset class. As you know, investors have been really challenging
Speaker 1: their their own portfolios rebalancing, looking to more defensive sectors.
Speaker 1: So companies are preparing UM and and that's that's where
Speaker 1: my optimism comes into play, where we're having conversations with
Speaker 1: companies on a daily basis that are still interested in
Speaker 1: in an I p O, whether that's this year or
Speaker 1: in what kind of like what kind of I p
Speaker 1: O are they interested in? Are they interested in a
Speaker 1: direct listing? Are they interested in you know, when we
Speaker 1: saw slack do that which has since been acquired by Salesforce.
Speaker 1: Uh we what about or they interested in a traditional
Speaker 1: I p O? And you know, let's save this bat
Speaker 1: conversation for a few minutes down the line too. Yep.
Speaker 1: So I think I think we're going to continue seeing
Speaker 1: the numbers largely in traditional I p O. S Uh,
Speaker 1: there's an interest in direct listing. More conversations are occurring
Speaker 1: UM from companies around that. Uh. It's still you know,
Speaker 1: not necessarily the most tried and true path, if you will, um,
Speaker 1: but with that option to to to raise capital alongside
Speaker 1: a direct listing, no one's yet done it before. We
Speaker 1: need somebody to take that plunge, if you will. And
Speaker 1: let's go right to SPACs now temp is that over?
Speaker 1: Is that? Was that just like a brief sweet dream
Speaker 1: where SPACs were really awesome and everyone did them and
Speaker 1: now it's over. You know, we don't think so. SPACs
Speaker 1: have been around for decades, UM certainly caught a lot
Speaker 1: of attention late, so I think they have staying staying power.
Speaker 1: There's obviously, you know, not only the general UH market
Speaker 1: dynamics that are impacting everybody and even the traditional I
Speaker 1: p O s that we mentioned, but with also impacting
Speaker 1: SPACs is the uncertainty around regulation. So more certainty around
Speaker 1: that regulation coming from the SEC and otherwise UM needs
Speaker 1: to occur for then all of the stakeholders in a
Speaker 1: spect for spect sponsors and underwriters and so forth to
Speaker 1: be able to respond and adapt. But I think they
Speaker 1: will respond and adapt. And will we see highs like
Speaker 1: we did in Probably not. But do they go away completely?
Speaker 1: I don't think so. Rachel. Can you give us some
Speaker 1: insight into the in the type of work that you
Speaker 1: do as I p O leader for e Y America's
Speaker 1: are what are the companies you work for and work with?
Speaker 1: We work with companies across all sectors UM private companies
Speaker 1: that are looking to go public, advising them through not
Speaker 1: only the I p O process UM and what to expect,
Speaker 1: but also I think equally important the public company readiness component.
Speaker 1: These organizations. As a private company, they've they've been focused
Speaker 1: on growth, They've been focused on their customers and their business,
Speaker 1: as they should be. Now as you transition to a
Speaker 1: pub company, you really need to have broader functional areas
Speaker 1: built out with a strong degree of discipline. We help
Speaker 1: advise companies through that whole path in making sure not
Speaker 1: only they're ready for the I P O transaction, but
Speaker 1: then also being a successful public company on the on
Speaker 1: the backside of that, and how will they perform and
Speaker 1: respond and are they prepared for the demands of being
Speaker 1: a public company. Maybe this is a wild card, but
Speaker 1: have we seen sort of the reverse? Have we seen
Speaker 1: any noticeable uptick in companies going private leaving the public markets.
Speaker 1: I don't think we've seen so much a trend as
Speaker 1: of yet. You know, there's certain certainly um situations where
Speaker 1: that's occurring um in any year for for a variety
Speaker 1: of reasons. I don't know that we've seen enough information
Speaker 1: though to indicate a trend um in this moment. So
Speaker 1: if we think about what the remainder of two looks
Speaker 1: like and going into three, if there is indeed a downturn.
Speaker 1: If we start to see companies really pull back on hiring,
Speaker 1: if we see a recession, what does that mean for
Speaker 1: the work that you do any y, I don't think
Speaker 1: it really changes a lot, because companies will need to
Speaker 1: continue as they're navigating those waters. They're going to continue challenge,
Speaker 1: challenging the efficiency of their business and how it's run,
Speaker 1: as well as the discipline. And that's where we really
Speaker 1: can provide a lot of value to organizations as they
Speaker 1: shore up UM, whether it's how they leverage technology, how
Speaker 1: they think about their talent and their workforce, the geographies
Speaker 1: in which they're operating in UM, and trying in identifying
Speaker 1: where efficiencies can be gained so that they can be
Speaker 1: a stronger company coming out of this market downturn. And
Speaker 1: I don't know, something we talk about often in the
Speaker 1: context contents of the past few years we have UH
Speaker 1: is that you saw a lot of demand pulled forward
Speaker 1: for a lot of companies. And we only have about
Speaker 1: forty seconds here, but I'm curious, you know how much
Speaker 1: of the slowdown we're seeing right now is just because
Speaker 1: we had so many companies go public already. That is
Speaker 1: a great point and I think we are seeing that
Speaker 1: there are companies who really took advantage of the valuations
Speaker 1: in the market, so they pulled forward, they accelerated, So
Speaker 1: I think that is something that we are seeing right now,
Speaker 1: particularly when you look at what didn't didn't happen in
Speaker 1: the first quarter and into the second quarter. But certainly
Speaker 1: the overall market dynamics um are also impacting a lot
Speaker 1: of companies in their plans. Rachel Garying, i p O
Speaker 1: leader at e Y America's Rachel, thanks so much for
Speaker 1: taking the time talking to us all about the I
Speaker 1: p O market this year and what to look for
Speaker 1: in the remainder of the year.