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IPO Stall Pushes M&A Dealmaking

Currently Avaya, a TPG Capital owned company taken private for $8.2 billion in 2007 is one of the largest pending IPO's at $1 billion along with Zynga, another TPG investment.

The other issue bankers are dealing with is price. As stocks get cheaper, private equity investors and company founders aren't inclined to sell into a falling market. "We did two big healthcare IPO's, HCA and Vanguard Health Systems (VHS). What we need for those kinds of IPOs is for the market to be at its historical mean," said Ditkoff of Bank of America Merrill Lynch.

While these companies may sit in the IPO waiting room for a while, "the taint" of filing a registration and waiting for an extended period is gone, said Credit Suisse's Bunzel. He added that he is advising companies considering an I.P.O. to continue to submit a shelf registration because when markets re-open, it's important to be first to market.

"I do think M&A will be part of the story because there are just too many deals in the queue," said Woolery of J.P. Morgan. But there is a hitch Woolery added, "In August, that activity came totally to a halt, there are not a ton of deals [like Goodrich] in the pipeline... It's very hard to do M&A deals when the market is going up and down three-to-four percent."

United Technologies (UTC) bought Goodrich (GR) earlier in September for $16.4 billion. According to preliminary third quarter Dealogic data released on Monday, global mergers and acquisitions for the third quarter that began in July and will end with September has fallen 23% from a year ago after posting gains of 22% and 23% in the first and second quarters.
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