Q3 IPOs: Auditor Market Share and More

There were 63 initial public offerings in the United States this past quarter, a decrease of about 30% compared to last quarter. In terms of total dollars raised, however, Q3 saw a significant increase. Thanks in large part to the record Alibaba offering, which raised $22 billion in its first round, the 63 IPOs in Q3 raised a total of $36.7 billion – more than the $33 billion raised in the first six months of the year combined.

All told, there have been 229 U.S. IPOs in the first three quarters of 2014, which have raised over $70 billion. For comparison, the same period in 2013 saw 175 IPOs, which raised about $40 billion.

Industry Analysis
Although the largest IPO in the period came from an e-commerce company, the IPO industry trends remain consistent with broader trends across the U.S. economy. Pharmaceutical companies accounted for over 36% of all IPOs in the last quarter, and raised $2.2 billion.

Auditor Market Share
As usual, the Big Four dominate the market for audit services to newly public companies, with about 78% of the market between them.

After PwC took the lead in Q2, EY reclaimed its usual position at the front of the pack in terms of the number of new clients won through IPOs. McGladrey made a big appearance this quarter with three IPO companies, one more than the two IPO clients audited by BDO and Grant Thornton.

EY has provided audit services to over a quarter of all companies that have gone public in the US so far in 2014, followed by PwC with 20%, Deloitte with 16%, and KPMG with 13%.

Emerging Growth Companies
51 of the 63 IPO companies elected to register as Emerging Growth Companies, suggesting that the popularity of this provision is not significantly waning.

For more information on IPOs, this post discusses Emerging Growth Companies, this one discusses EGCs and IPO-related accounting and legal fees, and this one looks at accounting and legal fees for IPOs in 2013.