Can Trump Revive the IPO Market?

Slowdown in Initial Public Offerings (IPOs)

While 2024 witnessed a slight increase in IPOs, the number fell short of the boom in 2020 and 2021. The decline can be attributed to the fading of speculative excitement and a failure of many new public companies to meet expectations.

Biden Administration's Impact

The Biden administration's policies, particularly the SEC's crackdown on SPACs and crypto, contributed to the slowdown in IPOs.

Policy Shifts Under Trump Administration

With a new administration led by a pro-business president, analysts predict a resurgence in IPOs. Dealmakers believe that a deregulatory push could stimulate the market.

Industry Optimism and Potential Catalysts

Lise Buyer of Class V Group believes that reduced regulatory requirements for sectors like crypto and AI could drive higher valuations and a more active IPO calendar.

West Riggs of Truist Securities highlights the outperformance of IPOs in 2024, indicating a receptive market for new issues in 2025.

Private Equity and Liquidity

Private equity funds, eager to generate liquidity, are expected to bring more companies to market despite lower valuations.

Potential Challenges

Rising interest rates and ongoing inflation concerns may dampen investor appetite for new issues.

SEC Changes and Regulatory Landscape

The incoming Trump administration's plan to reduce red tape could create a more streamlined environment for IPOs and reduce regulatory burdens.

However, wholesale changes to SEC regulations are unlikely, and the new administration's policies could potentially negatively impact companies from China seeking to enter U.S. markets.

Call for a Fundamental Rethink on Regulation

Despite technological advancements and the ease of starting businesses, the number of public companies in the U.S. has dwindled since the 1990s. Experts call for a radical rethink of the IPO regulatory framework.

Conclusion

While the Trump administration's plans could potentially boost IPOs, it remains to be seen whether fundamental changes will be made to the outdated capital markets regulations.

"Is it time to Make the American Capital Markets Great Again?" poses Elon Musk.