Get All Access for $5/mo

Nervous Optimism About Capital Markets for Small Businesses in 2013 JOBS Act could give rise to additional IPOs in the New Year.

By Cheryl Winokur Munk

Opinions expressed by Entrepreneur contributors are their own.

Small companies seeking funding from the capital markets could catch a break in 2013.

Private equity-backed companies are expected to dominate the IPO market in 2013, according to a December survey of 50 transaction attorneys published yesterday by KCSA Strategic Communications. Sixty-eight percent of those surveyed think that the number of private equity backed IPOs will be greater than in 2012, which saw the highest number of private equity-backed offerings since 2007.

This could be good news for small companies, who have increasingly turned to the private equity market for funding, amid ongoing softness in bank lending.

According to the survey, 35 percent of respondents believe that the IPO market will be stronger in the coming year than in 2012. The remaining respondents think the IPO market in 2013 will be relatively flat when compared with 2012. The attorneys polled worked at firms that advised on 87 percent of the initial public offerings listed on major U.S. exchanges during 2012.

If the IPO market opens up through an onslaught of privately equity-backed companies going public, it bodes well for other small businesses seeking funding since private equity firms will have more available cash to invest in new companies. "All of this feeds on itself," says Jeff Corbin, chief executive of KCSA.

Related: The Biggest Trends in Business for 2013

There's no guarantee that hopes for a brighter 2013 will pan out. Lawmakers are in the midst of making a last-ditch effort to avoid the automatic tax hikes and spending cuts set to take effect Jan. 1, and questions about the strength of the U.S. economy and the Eurozone continue to fester. What's more, consumer confidence tumbled in December. Taken together, there's a "nervous optimism" about what the capital markets will be like in the U.S. in 2013, Corbin says.

Nonetheless, the attorneys surveyed feel the IPO market could get an additional boost this coming year as a result of The Jumpstart Our Business Startups Act (JOBS Act), a 2012 law designed to bolster funding of U.S. small businesses by easing various securities regulations.

The attorneys surveyed felt the JOBS Act has encouraged small companies to pursue potential IPOs, with 94 percent of respondents citing an increase in the number of confidential filings as a result of the Act. While there might only be 60 to 70 deals on the public docket now, many more small businesses could make their filings public in 2013 should conditions be right, Corbin says.

"Everybody's been waiting for the capital markets to open up. Maybe this year will be the year," Corbin says.

Related: JOBS Act Legislation Opens Up Crowdfunding

Cheryl Winokur Munk is a freelance writer and editor in West Orange, NJ. She is a former reporter for Dow Jones Newswires and American Banker where she covered the financial services industry. She earned a B.S. in journalism from Boston University.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick


ChatGPT is Becoming More Human-Like. Here's How The Tool is Getting Smarter at Replicating Your Voice, Brand and Personality.

AI can be instrumental in building your brand and boosting awareness, but the right approach is critical. A custom GPT delivers tailored collateral based on your ethos, personality and unique positioning factors.

Growing a Business

He Immigrated to the U.S. and Got a Job at McDonald's — Then His Aversion to Being 'Too Comfortable' Led to a Fast-Growing Company That's Hard to Miss

Voyo Popovic launched his moving and storage company in 2018 — and he's been innovating in the industry ever since.

Business News

Is the AI Industry Consolidating? Hugging Face CEO Says More AI Entrepreneurs Are Looking to Be Acquired

Clément Delangue, the CEO of Hugging Face, a $4.5 billion startup, says he gets at least 10 acquisition requests a week and it's "increased quite a lot."

Business News

You Can Now Apply to Renew Your U.S. Passport Online — But There's a Catch

The U.S. State Department officially launched the beta program this week.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Apple Reportedly Isn't Paying OpenAI to Use ChatGPT in iPhones

The next big iPhone update brings ChatGPT directly to Apple devices.