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Stars Align and 2013 Proves to be Hottest U.S. IPO Market Since 2004 — Momentum Continues in 2014

— PE-backed IPOs dominate with most active year since 2007

— 2013: year of the healthcare IPO

— “Blurring” of technology and other industries lead to interesting implications for IPOs

NEW YORK, Dec. 10, 2013, The market environment delivered all of the right signals in 2013, presenting a long-awaited window of opportunity for IPOs. With a calmer economic climate, companies looking to go public were seemingly unphased by the 4^th quarter government shutdown. This, combined with low volatility and a huge backlog of PE-backed IPOs seeking an exit, brought IPOs back with a bang: 222 IPOs in total will go effective in 2013 raising proceeds of $59.7 billion[1], with 76 deals in the public pipeline at the end of Q4. Activity and momentum in 2014 are only expected to continue.

“Investors have had the opportunity to engage with a variety of companies in the pipeline and their appetite for risk has returned,” said Jackie Kelley, for the global EY organization. “Unlike five years ago when, for the most part, tech companies were the only ones getting out, we now see pockets of activity in multiple sectors. This was a standout year for healthcare, for example. VC-backed companies came back to market and PE-backed IPOs will continue to push into 2014.”

Year over year, the number of IPOs increased 67%, from 133 in 2012 to 222 in 2013. Proceeds increased 28%. Quarter over quarter, there were 67 IPOs in Q4 2013 compared with 33 in Q4 2012, an increase of 103%, with proceeds up 171%; additionally, the number of IPOs in Q4 increased by 12%, and proceeds increased by 96% when compared with Q3 2013.

IPOs from around the world
The US continues to attract IPOs from around the world as companies seek to capitalize on the momentum of the US capital markets. For example, 36 out of 222 US IPOs were cross-border IPOs, ie 16% of US exchanges IPOs by deal number and 11% by capital raised (US$6.7b raised) were from foreign private issuers. This compares to 9% of US IPOs by deal number and 12% by capital raised in 2012.

The IPO market surge in the US, positive investor sentiment for this asset class and appetite for global investment makes the US attractive and much more competitive than their domestic markets.

PE-backed IPOs Dominate:
PE activity provided a key source of IPO-related exits this year. As an indicator of the volume, in 2007, the peak year for PE-backed IPOs, there were 94 deals with proceeds of $20.3 billion. In 2013, by contrast, of the 222 IPOs, 94 were PE-backed and valued at $32.8 billion. An impressive 42% of all US IPOs were from PE backed companies.

Large offerings in the oil and gas sector drove the trend, collectively raising $5.8 billion. And despite relatively robust levels of exit activity over the last two years, there remains a significant backlog of PE exits that will continue to spur IPO activity into 2014. Multiple PE firms raised upwards of $10 billion in 2013, a sign of optimism for future deal making. While the increased interest in IPOs is a positive development for PE exits, an uptick in M&A will ultimately be required to fully liquidate the current PE portfolio.

Healthcare on Top:
After being sidelined for almost 10 years, the healthcare sector came back to market in a big way in 2013. Most of the healthcare companies in the pipeline were smaller IPOs that really benefitted from the JOBS Act, legislation put in place over a year ago easing the IPO path for companies with post-IPO market cap size of less than $1 billion.

However, investors, chasing healthcare IPOs for their great performance and the substantive products they are developing, may not stick around if market volatility heats up again. Other sectors rounding out the top five include: Technology, Energy and Power, Real Estate and Financial Services.

Emerging IPO Companies Will Blur Distinctions Between Sectors:
The growing convergence between technology companies and other industries is creating new opportunities for companies to add shareholder value via the capital markets. “We expect to see more blurring of tech and other industries — including consumer products, media, real estate, financial services,” said Kelley. “Companies in these “blurred” industries, meaning they can cross over into two different sectors, are coming to market. They will have a choice under which sector to list and it’s likely that valuation will be a key driver.”

As more consumers utilize mobile and cloud technology to get what they want and faster, emerging IPO companies coming to market will be more focused on creating direct touch points with consumers, eliminating the middle man to bring suppliers and customers closer together, according to Kelley. She suggests we can expect to see more companies offering personalized products or a more personal user experience, such as making personal and business transactions faster, simpler and more secure; building customer trust; and delivering quality content and insight for users.

2014 Looking Ahead:
As 2014 rides the performance wave of 2013, the future looks bright for the IPO pipeline. Investors will look to the IPO market to drive portfolio growth. Inbound interest has piqued, with companies in Europe, the Middle East and South America looking to list on the U.S. markets –driven by the high valuations companies have garnered and good post-IPO performances over the past year.

“IPOs in 2014 will be a combination of household names, as well as disruptive, innovative companies. The backlog of PE-backed IPOs will continue to push into 2014 and companies blurred by sector convergence will drive market activity, all making for another exciting year,” concluded Kelley.

Notes to editors
All Data sourced from Dealogic.

About EY’s IPO offerings

EY firms are leaders in helping to take companies public worldwide. With decades of experience our global network is dedicated to serving market leaders and helping businesses evaluate the pros and cons of an IPO. We demystify the process by offering IPO readiness assessments, IPO preparation, project management and execution services, all of which help prepare you for life in the public spotlight. Our EY Global IPO Center of Excellence is a virtual hub which provides access to our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

[1] Data are completed IPOs through December 5, 2013 and projected IPOs in December, 2013

SOURCE:

http://www.ey.com

KPMG Survey: Corporate Tax Leaders Say U.S. Business Tax Reform And Transfer Pricing Environment Are Top Global Tax Concerns

Survey Results Issued In Connection With KPMG’s U.S. Tax Summit

NEW YORK, June 4, 2013, The potential for U.S. federal business tax reform and the rigorous pursuit of transfer pricing adjustments by foreign countries are the top global tax concerns facing senior U.S. tax professionals, according to a survey issued today by U.S. audit, tax and advisory firm KPMG LLP in connection with its 2013 U.S. Tax Summit this week in Orlando, Fla.

“It’s clear from our survey that tax department leaders are focused on how to manage in the persistent and active regulatory environment in transfer pricing and are also devoting increasing attention to how changes in U.S. tax legislation will affect their global operational decisions,” said Jeffrey C. LeSage , vice chairman of KPMG’s U.S. Tax practice. “We believe that these and other key tax issues will present U.S. companies with challenges and opportunities as the global business landscape continues to evolve.”

The survey of almost 250 U.S. senior tax professionals — conducted prior to KPMG’s 2013 U.S. Tax Summit, taking place June 3-5 — also polled companies on tax cloud initiatives, the tax impact of import and export activities, sustainability, and legislation on taxation of Internet sales.

According to the survey, 26 percent cited the pursuit of transfer pricing adjustments as their greatest global tax concern, while 24 percent pointed to the potential for U.S. federal business tax reform. Other top concerns included the increasing number of countries aggressively pursuing ‘permanent establishment’ as an approach to asserting a jurisdiction’s taxing authority and the lack of a uniform approach by countries (15 percent) and challenges related to obtaining meaningful data that enables a company to project its annual effective tax rate with confidence (12 percent).

Tax Not Adequately Involved With Cloud

The survey also revealed that just 12 percent of tax departments are involved in early-stage discussions around cloud-related business transformation and almost one-third (30 percent) said when it comes to decisions on cloud-enabled business transformation their department is still being left out of the decision-making process.

“The feedback related to cloud business activities is particularly eye-catching,” said Laura Newinski, national managing partner-Tax at KPMG, “because we’ve seen that many companies that leave tax departments out of early cloud-related discussions also leave money on the table when it comes to the ultimate return-on-investments (ROI) of their cloud projects.”

In another interesting finding, 4 in 10 tax executives had not yet evaluated the potential impact of the Marketplace Fairness Act of 2013, despite the Senate’s recent passage of the bill, which would allow states to require online and other out-of-state merchants to collect and remit sales and use taxes on products and services they sell. Only 5 percent said they had evaluated the legislation and believe it will have a significant impact.

“Companies that may be affected by the potential changes to the taxation of online and remote sales need to pay close attention to the legislation and new tax compliance obligations that may be imposed on them,” KPMG’s LeSage said. “If passed, the bill could be the most significant game changer in U.S. state and local tax in years.”

Legislative & Regulatory Impact on Trade & Customs

When asked what new regulatory, legislative or policy development has had the most impact on their company’s global import and export activities, nearly one in four respondents (21 percent) cited aggressive enforcement of customs valuation laws associated with related party pricing and the ‘dutiability’ of royalties.

And with regard to tax’s role in a company’s sustainability strategy, more than one-third (37 percent) of respondents report that they have no significant role as a tax executive in implementing that strategy for their companies. Rather, 28 percent said their role involved strategic implementation to managing the overall after-tax return of sustainability projects.

“As all of these issues spotlight, the challenge for tax departments in the future will be to stay out in front of developments and make the case that their insights can add value to their company’s overall business and bottom line in light of rapidly evolving needs,” said LeSage.

The KPMG “pulse” survey, conducted May 16-23, reflects the responses of 242 senior tax professionals including tax directors, tax managers, vice presidents of tax, chief tax officers and tax analysts.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.

Contact:	Robert Nihen/Bridget Carroll
	KPMG LLP
	201-307-8296/201-505-6501
	rnihen@kpmg.com; bccarroll@kpmg.com

SOURCE:

KPMG LLP

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