And because markets feel a bit like this right now.
Andrew Burton — Getty Images
By Lucinda Shen
August 1, 2016

Investors might be waiting for the next Apple (aapl) or Google (googl) or even Facebook (fb) to go public—but they’re unlikely to have many to choose from this year.

This year has been the slowest for U.S. initial public offerings since 2009, according to mergers and acquisitions research firm, Dealogic. Fifty-four U.S. IPOs have raised $11.5 billion in the first seven months of this year—down from the $22.9 billion raised through 118 deals through the same period last year.

That’s partially because private equity firms, a key source of new IPOs, are increasingly selling their companies off to strategic investors rather taking them public. PE firms appear to be worried about whether they’ll be able to gain higher returns in the public space amid volatile market conditions. That anxiety is likely justified, given that just two IPOs have priced above range this year. Those two being tech companies Twilio (twlo), which closed up nearly 92% on its first day of trading, and Line, which closed up 27% from its IPO price.

Meanwhile private companies are also seeing the upside of staying private: No more answering constantly to regulators, activist investors, and shareholders. Additionally, not only are some private companies receiving sound funding without a listing, companies contemplating going public are also thinking about a merger or acquisition at the same time. In response, such companies are also receiving takeover offers they can’t refuse.

That includes Blue Coat System, a cybersecurity firm that abandoned its IPO plans in June to sell itself to Symantec for $4.65 billion. Petco Holdings also withdrew plans to go public in February, after agreeing to a $4.6 billion acquisition by CVC Capital Partners and Canadian Pension Plan Investment Board.

Private equity firms selling their companies to other private entities is not exactly a new trend this year—Ernest and Young noted by the end of 2015 that the number of IPOs that year were in line with 2014 numbers—though private-equity backed deals fell. IPOs shrank from nearly a quarter of total private equity exit value in 2014 to 14% in 2015, as the firms took stock of a mixed economy and more risk aversion.

 

Meanwhile, 2016 has been the year of tech company mergers and acquisitions, with $394 billion worth in tech deals thus far‚ making this year the second largest in history for tech takeovers.

And it’s likely more is to come. The private equity industry has been growing its pile of “dry powder,”—cash available to do deals—over the past few quarters. That grew to a record $818 billion by the end of June, according to Preqin. Now it’s a matter of when, and where, those funds will go.

That’s probably good news for the market in general. But if you were looking for a few new growth companies to flesh out your portfolio, it’s likely to continue to be slim pickings.

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