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Q4 2016 IPOs: Auditor Market Share and More

  • Jessica Hotham

    • Overview
    There were 33 initial public offerings in U.S. markets in the fourth quarter of 2016, representing a decrease of 25% from the same period last year when there were 44 IPOs. The total amount raised this quarter was $7.8 billion, only a slight decrease from the $7.9 billion raised last year.

    Coincidentally, there were also 44 IPOs in Q3 2016, raising about $7 billion. Of note, the total amount raised this quarter increased by $0.8 billion (11%) even though the number of IPOs decreased by 25% compared to last quarter.

    All told, there were 128 U.S. IPOs in 2016, which raised over $23 billion. For comparison, 2015 saw 204 IPOs raising over $38 billion, and 2014 had 309 IPOs that raised $90 billion.

    Industry Analysis
    ZTO Express (Cayman) Inc., an express delivery service, raised the most in this quarter, totaling $1.4 billion.

    Pharmaceuticals (NAICS 325412) and Software Publishers (511210) led the way all year, with 23 and 10 IPOs, respectively. Pharmaceutical companies raised about 8% of the total for the year ($1.9 billion), and software publishing companies raised about $1.2 billion.

    Auditor Market Share
    As usual, the Big Four tended to dominate the IPO market.

    In the third quarter, EY led the way with 24% of new IPO companies. PwC and KPMG were not far behind.

    For the whole year, PwC was in pole position with 26 IPO clients. KPMG and EY were not far behind tied at 23.

    Altogether, the Big Four firms had about 66% market share for 2016 IPOs, about the same as in 2015.

    Emerging Growth Companies
    110 of the 128 IPO companies, or 86%, elected to register as Emerging Growth Companies, a decrease from the 92% of companies that registered as EGCs last year.

    Conclusion
    Although the IPO activity in the U.S. for 2016 was the slowest it has been since 2009, it is expected to pick up in 2017.

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