After a slow first quarter of 2022, initial public offerings didn’t take off in the second quarter either. In fact, the 46 IPOs in Q2 was the fewest since the first quarter of 2020 (38), and the $5.3 billion raised by those 46 companies that went public was the smallest amount since the first quarter of 2016 ($2.9 billion), according to a new analysis from Audit Analytics.
The second quarter also saw a continued decline in IPOs via special-purpose acquisition companies—only 16 of the 46 IPOs were SPACs, while the other 30 were traditional IPOs. Compared to Q2 of 2021, the number of traditional IPOs (including direct listings) declined by 75%, and the number of SPAC IPOs fell by 79%. Based on the amount raised, traditional IPOs dropped 95% and SPAC IPOs fell by 84%.
Things aren’t looking that great for a SPAC rebound in Q3. Bloomberg reported on July 1 that at least four SPAC tie-ups were called off before the end of the previous day’s trading, bringing the year’s total to 30 breakups. The SPAC slump is expected to keep Panera Brands, the owner of Panera Bread and Einstein Bros. Bagels, and online brokerage eToro private. Bloomberg continued:
With just over half the year gone, SPACs and the companies that went public by merging with them have fizzled amid one of the stock market’s worst routs in decades that has been particularly cruel to riskier stocks. The De-SPAC Index, a basket of companies that completed their tie-ups, has crashed 67% and more than 700 SPACs are either on the hunt for deals or racing the clock to close ahead of deadlines.
Even though SPACs are going through a rough patch, public accounting firms that are SPAC auditing machines were kept the busiest in Q2. Marcum, the top IPO auditor in Q1 of 2022, had the most total IPO audit clients in Q2 with 10, six of which were SPACs. Marcum was followed by Friedman with six IPO audit clients, four of which were SPACs. And it just so happens that Marcum and Friedman are merging later this summer.
Here’s the Q2 IPO auditor market share scoreboard, courtesy of Audit Analytics:
The scoreboard changes slightly if you factor out SPACs. PwC and Marcum both had four traditional IPO audit clients in Q2, followed by Friedman, Grant Thornton, and Manning Elliott with two.
Q2 2022 Initial Public Offering Trends: 2022 Slowdown Continues [Audit Analytics]