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