CareCredit - Women's Health April 2024

Report: Companies Rush to File IPOs Amid Looming Government Shutdown

The possibility of a U.S. government shutdown has prompted companies to take action and expedite their plans to go public.

In an effort to avoid potential disruptions caused by a government shutdown, companies like Waystar Holding and Hamilton Insurance Group have submitted filings for their initial public offerings (IPOs) this week, according to a Tuesday (Oct. 17) Bloomberg report.

Amid an ongoing contest for the speaker of the House role after the ouster of Congressman Kevin McCarthy, the market is bracing for a government shutdown as soon as Nov. 17. If that happens, the U.S. Securities and Exchange Commission will be left with a bare-bones staff, hampering new IPO listings and forcing companies to either expedite efforts to go public sooner than planned or wait for the government to reopen.

A government shutdown can disrupt regulatory processes, delay approvals and create uncertainty in the market, Bloomberg noted. Recognizing these risks, companies are keen to push forward with their IPO plans before a potential shutdown occurs, the report said.

“The question starting next week is whether issuers will be willing to file publicly in order to have the optionality if there is another government funding extension with the risk of being on file publicly for months if there is no extension,” Richard Truesdell Jr., a partner at law firm Davis Polk & Wardwell, told Bloomberg.

The looming threat of a government shutdown has created a sense of urgency among companies looking to go public despite the underwhelming performances of other high-profile IPOs this year.

Filing for an IPO during a potential government shutdown is not without risks. The market can be highly volatile during such periods, making it challenging for companies to attract investors and achieve their desired valuations. However, by filing now, companies are positioning themselves to take advantage of any positive market conditions that may arise before a shutdown occurs.

The flurry of activity comes despite a recent PYMNTS report noting that venture capitalists are signaling for companies to hold back on filing an IPO.

“In our portfolio we would advise: unless you really need to, hold back,” Mike Volpi, a general partner at VC firm Index Ventures, told the Financial Times (FT) earlier this month. “The market has been rough in the past few weeks. … Unless you need to go out, I’d wait until the second half of next year.”

Citing data from Pitchbook, FT noted then that there were an estimated backlog of nearly 80 IPO candidates waiting to go public.