Market imbalance

The markets are shrinking. And we’re not just referring to the trillions of dollars of value that have been lost from the New York Stock Exchange and the Nasdaq over the past year. Instead, we’re talking about the actual number of companies on the markets.

Listings rise and fall over the years, as companies go public or get acquired. At least, they do in normal years. But in a year like 2008, with black swans flying across the sky, the number of listings just falls (rather like the prices of the stocks that remain on the exchanges). Already this year, we’ve seen some 62 US publicly traded companies get acquired. On the other side of the ledger, we’ve had fewer than 10 technology IPOs since January. (And don’t look for Metastorm, which filed to go public in mid-May, to debut on the Nasdaq anytime soon. The company pulled its planned offering on Thursday.)

In terms of M&A dollars, as you might guess given the state of the markets, the companies that trade on them have been sharply marked down, as well. While the number of deals has dropped 27%, the value of those deals has plummeted twice that amount (56%). In addition, spending on public company deals has declined even more than the overall tech M&A market, which has sunk about 40% in terms of dollars spent so far this year.

Acquisitions of US public companies

Period Deal volume Deal value
January 1-November 14, 2007 85 $250bn
January 1-November 14, 2008 62 $109bn

Source: The 451 M&A KnowledgeBase