Last week, Bloomberg released data on initial public offering (IPO) underwriters and their fees. For the first time since World War II, U.S. investment bankers are on the verge of earning less from IPOs than their counterparts in Europe. As American underwriters continue to charge double the going rate for European IPOs, the total amount of money raised in Europe this year is 78% greater than the value of U.S. offerings. IPOs in Europe have raised $37.8 billion in 2007, exceeding the $21.2 billion of new issues sold on U.S. exchanges.
The 2002 wave of corporate scandals in America resulted in heightened reporting and accounting controls in the form of Sarbanes-Oxley Act (SOX). A survey of public companies conducted by Foley & Lardner LLP last year concluded that the overall cost of being a publicly traded company increased 33% in the year after SOX was adopted, with an astounding 174% increase in compliance costs. As a result, many American companies are now looking to list in London or on the NYSE-owned Euronext exchange.
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