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The sputtering initial public offering market may never again be as robust as it once was because there's much more incentive for the owners of growing, young companies to sell out than to go public, suggests one study.
“I am of the opinion that venture capitalists will not be taking many companies public for the foreseeable future, even if the stock market rallies,” says Jay Ritter, a University of Florida finance professor and co-author of the paper “Where Have All the IPOs Gone?”.
The lack of IPOs would be a concern because economists say fast-growing, young firms are more likely to add jobs than established older corporations.
And this has already been a challenging year, with companies folding their IPO plans in record numbers. Only two firms, Zeltiq Aesthetics and Ubiquiti Networks , made market debuts since mid-August. It also remains to be seen how investors will receive a high-profile offering from daily deals website Groupon, expected to start a roadshow next week.
Ritter says compared to the heyday levels of the 1980s and 1990s , IPO activity has been slow for a decade and is bound to stay that way because of structural changes in the economy.
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