When IPOs Forewarn Market Rollovers

A Walk Through History as Valuable Context for the Present

For a good part of my career in finance, I was heavily involved in equity capital markets (ECM, i.e. deals) as it related to bookbuilding, pricing, and post-deal trading. Because of this, the ECM pipeline remains a point of interest for me, even if only tangentially. In particular, the signs that an IPO window may be closing have demonstrated a consistent pattern over the decades, and because these are infrequent periods, they always catch my attention. Any significant throttling back of ECM performance is usually a strong late-cycle signal that broader markets are about to turn down, especially if too much supply of paper has overwhelmed demand in the primary markets for IPOs.