Slow IPO Market? Find and Mine Verticals

Wealth managers typically love initial public offerings because they generate a lot of new wealth from the founders and c-suite to the rank-and-file and sometimes the support staff. 2021 was a record year, with 309 IPOs that generated $152 billion of funding.

Then Russia invaded Ukraine, and inflation, already elevated because of hiring issues and supply chain hiccups, accelerated. And with those two events, the IPO market froze as the equity market slumped. Last year, deals and capital were down about 95% each, with just 17 deals and $7 billion in capital. Making matters worse, some firms that went public just a short time ago are packing it in and going private again. Weber, the iconic backyard grill company, went public in August of 2021 at $18 per share, and is now being taken private at $8 a share, after falling down to $5 per share last fall.

What does it all mean for wealth managers??Find and mine new verticals.

Divorces spiked during the pandemic, and many of the HNW cases are still grinding their ways through overwhelmed court systems. Business litigation, some caused by aforementioned supply chain issues, is up, and those, too, are moving slowly through the courts. And private market transactions, while down, still have some life to them – though often it’s only the owners who have significant liquidity events when a private company sells.

Or, with the S&P down 17% last year and the Dow down 7%, look toward employees and executives of companies that IPO’d back in 2018 and 2019. How did they enjoy 2022? Did their wealth managers take care of their money? Dissatisfied clients – especially those who never before had a wealth manager and now have one that they are disappointed with – can be a great source of new business.?