In the shengxiao, the year 2025 was represented by the snake. As the sixth of the 12 animals in the Chinese zodiac, the snake represents both mystery and transformation.
For capital markets lawyers that is exactly what 2025 was supposed to be, a year of pipeline deals, AI-driven demand and a new presidential administration primed to relieve public companies from the inordinate burdens associated with their public-ness.
Well, it was. And it wasn’t.
It’s been a busier year than those passed. But capital markets have changed and are changing. The yearly stats say so. And so do the lawyers who make their living assembling them.
First the stats. The health of public markets is generally measured by the number Initial Public Offerings and their performance; and by that measure 2025 has been okay.
According to Stock Analysis, which measures SEC registrations, there have been at least 344 IPOs issued in 2025, the third highest number since 2000 — more than 2024 (225) and more than 2022 (181) and 2023 (154) combined.
Katherine Frank is a capital markets partner at the law firm of Vinson & Elkins. She had high hopes for 2025 as, at least, a modest breakthrough year.
“At the beginning of this year we thought it was going to be the year of the IPO,” said Frank. “And then the tariffs put a bit of a halt on that.”
Doug Getten, a partner at Baker Botts in Houston, says he felt similarly hopeful.
“I think most securities lawyers throughout the country were very bullish about the capital markets and Trump’s second term,” says Getten. “We were off to a modest start in the first quarter of the year, then ‘Liberation Day’ really slowed things down.”
Neither can reasonably be faulted for their optimism.
As the year began the numbers trailing behind IPOs, even those in Texas, seemed promising.
In a January IPO Flowco, a Fort Worth oilfield equipment manufacturer and services company, went public at a value of $2.1 billion. That was followed in February by Sailpoint, an Austin-based identity security company, with a $12.6 billion valuation. Even by June, as the toll of tariff turmoil set in, Caris Life Sciences, a precision medicine biotech in Irving opened to a valuation of $7.4 billion.
The surge of demand for data centers to support artificial intelligence and the infrastructure that goes with it has created a massive demand for capital to support deals for almost everything; not only for computers, computer chips and electricity, but for HVAC installation and maintenance, power-adjacent real estate, gas-driven turbines, midstream waterlines, electrical component manufacturing and AI-friendly datasets.
“The amount of data center infrastructure and power/electricity deals going on dwarfs the rest of any other sectors in Texas,” says Logan Weissler, a Dallas associate at V&E.
Add to that a change in administrations with a promise of relaxed regulation, the approval of a new Texas Stock Exchange and significant changes in Texas corporate governance, not to mention record levels for market indexes and optimism was inescapable, especially in Texas.
Jason Rocha, a partner with White & Case in Houston, was part of the them that much of the year working on the merger of Houston-headquartered Calpine Energy into Constellation Energy, a merger that both bridged and typified 2025: a $16.4 billion consolidation (or $26.6 billion, depending on how you’re counting) of publicly traded power & utility companies, announced in January — a deal that cleared its final regulatory hurdle in a December agreement with the U.S. Justice Department to shed six power plants.
But there were other, private clients that were sincerely interested in going public of late, building parallel exit options into their strategy. In the end, however, they chose a private off-ramp.
“In the past 12 month we’ve been working on three separate IPOs in the power space, and they’ve all opted for an M&A exit as opposed to an IPO. They got pretty far down the IPO path, so they really were interested in going public,” Rocha said.
“That says a few things to me. Bankers feel there’s a market. Investors are telling people there’s a market. And obviously, we’ve seen how prices have been for a lot of the public companies. Still, it looks to me like companies can still receive higher valuations on the M&A side. And I think that has had the effect of decreasing the number of IPOs.”
That’s the conundrum. For all the of the attention dedicated to skyrocketing market indexes, the role of capital markets has been declining for the past three decades, becoming less significant and more complex as other sources of capital increase their roles in the M&A marketplace.
The 344 IPOs issued this year is less than a third of the 1,035 offered in 2021, a halcyon year in nearly all forms of corporate transaction. But since 2020, only one year (2020) saw more than 400 IPOs and only three years saw more than 300 — 2000 (397), 2004 (314) and 2014 (304).
Moreover, much of the current capital markets traffic is offered in the form of blank check companies, secondary offerings or, most often, debt; debt to finance mergers or refinance existing debt.
“When Covid was happening anyone who had a stable business and had the capacity to borrow were going to borrow,” said Frank. “And so, what we’ve seen in the past year or 18 months is a lot of refi of that five-year debt coming due, and so that has generated a lot of work.”
But just as there are fewer companies going public, there are fewer public companies. In 1996, when there were 8,090 companies listed on U.S. exchanges. By 2020, the year of the pandemic shutdowns, that number had dwindled to 4,104.
Reasons given for the decline can be varied and complex. Some are more popular than others.
Businesses and politicians, for instance, have long complained about regulatory reporting, which can be onerous on the balance sheets of smaller publicly traded concerns. But a forthcoming study from the Columbia University Business School argues that the role regulation in the decline of capital markets is exaggerated.
Studying the behavior of public companies across the thresholds of securities regulation, the authors conclude that government regulation accounts for only 7.3 percent of IPO decline. Says Kairong Xiao, a co-author of the study, “The public market is disappearing, and it’s concerning, but regulatory cost isn’t the smoking gun.”
The most obvious reason for the decline in public markets is the rise in private capital with an $2.184 trillion in “dry powder” — global undeployed private equity capital — as estimated earlier this year by S&P Global. That’s down slightly from $2.819 trillion in 2024 after increasing over each of the previous 24 years.
That dry powder is now showing up in some spectacular take-private deals: the $55 billion acquisition of video gamers Electronic Arts; the $18.3 billion buyout of medical products manufacturer Hologic and the $11.5 billion Blackstone acquisition of TXNM Energy, a major electricity provider across Texas and New Mexico.
PE not only buys, it lends. This year, private debt assets are expected to reach $1.7 trillion, about 11 percent of $15.5 trillion in private capital investment.
Frank says she’s still optimistic for next year. A reconfiguration of regulatory reporting — perhaps reporting at six-month intervals instead of quarterly, for instance — could make a difference.
“(Regulators) are taking a look, at least, into a lot of the burdensome disclosure and registration elements of being a public company. If that’s successful, it might make the cost of becoming public more attractive and drive a stronger IPO market,” Frank said.
For Weissler, who just joined V&E from Haynes Boone, the decline in capital markets has yielded to a more complex — and in some ways more satisfying — role for the capital markets lawyer. While at Haynes Boone, Weissler worked on the IPO of Fermi America, a Dallas-based data center REIT that in October managed to debut nearly simultaneously on both the Nasdaq and London stock exchanges.
“Dallas capital markets lawyers can’t just be energy lawyers. No way. There’s just too much going on,” said Weissler. “Very few capital markets lawyers currently do what they thought they would be doing ten years ago. But it opens up a lot of opportunity, right?”
Maybe. In the Chinese zodiac, 2026 is the year of the “Fire Horse” — a symbol of “intense creativity and energy,” but one that also includes “chaos.”