In the shengxiaothe year 2025 was represented by the serpent. As the sixth of the 12 animals of the Chinese zodiac, the snake represents both mystery and transformation.
For capital markets lawyers, this is exactly what 2025 was supposed to be: a year of pipeline deals, An AI-driven request and a new presidential administration designed to relieve public enterprises of the excessive burdens associated with their public nature.
Well, it was. And it wasn’t.
This has been a busier year than previous ones. But financial markets have changed and continue to change. The annual statistics say so. Just like the lawyers who make a living putting them together.
First, the statistics. The health of public markets is generally measured by the number of IPOs and their performance, and 2025 is looking good.
According to Stock Analysis, which measures SEC filings, there have been at least 344 IPOs issued in 2025, the third highest number since 2000 – more than 2024 (225), 2022 (181) and 2023 (154).
Katherine Frank is a capital markets associate in the Dallas office of the law firm Vinson & Elkins. She had high hopes for 2025, which would be at least a modest breakthrough year.
“At the beginning of this year, we thought it was going to be the year of the IPO,” Frank said. “And then the tariffs kind of put a stop to that.”
We cannot reasonably blame him for his optimism.
THE high demand for data centers sustain artificial intelligence and the accompanying infrastructure has created a massive demand for capital to support transactions on almost everything; not only for computers, computer chips and electricity, but also for HVAC installation and maintenance, adjacent to the power supply. real estategas turbines, intermediate water pipelines, electrical component manufacturing, and AI-enabled data sets.
“The number of data center infrastructure and power contracts in progress dwarfs the rest of every other sector in Texas,” says Logan Weissler, Dallas partner at V&E.
Add to that a change of administration with the promise of relaxed regulations, the approval of a new TExas scholarship and significant changes in corporate governance in Texas, not to mention record highs in stock indexes and optimism was inevitable, especially in Texas.
But in the face of soaring stock indexes, the role of capital markets has diminished over the past three decades, becoming less important and more complex as other sources of capital have increased their presence in the M&A market.
The decline in IPOs mentioned above is not a recent phenomenon. The 344 IPOs issued this year represent less than a third of the 1,035 offered in 2021, a boom year in almost all forms of corporate deals. But since 2020, only one year (2020) has seen more than 400 IPOs, and only three years have seen more than 300: 2000 (397), 2004 (314), and 2014 (304).
Additionally, much of today’s capital markets traffic is offered in the form of blank check companies, secondary offerings, or, most commonly, debt securities; debt to finance mergers or refinance existing debt.
“When COVID-19 was hitting, anyone with a stable business and the ability to borrow was going to borrow,” Frank said. “And so what we’ve seen over the last 18 months is a lot of refinancing of that five-year debt coming due, and so that’s generated a lot of work.”
But as fewer companies go public, there are fewer public companies. In 1996, 8,090 companies were listed on U.S. stock exchanges. In 2020, the year of closures due to the pandemic, this number had fallen to 4,104.
The reasons given to explain this decline can be varied and complex. Some are more popular than others.
Businesses and politicians, for example, have long complained about regulatory reporting, which can be onerous on the balance sheets of smaller, publicly traded companies. But one upcoming study from Columbia University Business School, argues that the role of regulation in the decline of capital markets is exaggerated.
By studying the behavior of public companies at the thresholds of securities regulation, the authors concluded that government regulation is responsible for only 7.3 percent of the decline in IPOs. Kairong Xiao, co-author of the study, says: “The public market is disappearing, and that is worrying, but the cost of regulation is not conclusive evidence. »
The most obvious reason for the decline in public markets is the increase in private capital, with $2.184 billion in “dry powder” – undeployed global private equity – according to estimates earlier this year from S&P Global. That’s down slightly from $2.819 billion in 2024, after increasing in each of the previous 24 years.
This dry powder now appears in spectacular privatization operations: the $55 billion acquisition of video game manufacturer Electronic Arts; the $18.3 billion takeover of medical products manufacturer Hologic; and Blackstone’s acquisition of TXNM Energy, a major electricity provider in Texas and New Mexico, for $11.5 billion.
The EP not only buys, but also lends. This year, private debt assets are expected to reach $1.7 trillion, or about 11% of the $15.5 trillion in private investment.
Frank says she’s still optimistic about next year. A reconfiguration of regulatory reporting – perhaps for example at six-month intervals instead of quarterly – could make a difference.
“(Regulators) are at least looking at many of the burdensome disclosure and registration elements of being a public company. If successful, it could make the cost of going public more attractive and spur a stronger IPO market,” Frank said.
For Weissler, who just joined V&E from Haynes Boone, the decline of capital markets has given rise to a more complex – and, in some ways, more satisfying – role for the capital markets lawyer.