Chances are, the IPO market won't start 2017 the way it began 2016. And that's a good thing, both for investors in new issues and for companies anxious to get on a glide path to trading publicly.

"The longer the public markets do well, the easier it is for companies to come public," Kathleen Smith, principal at Renaissance Capital LLC, the manager of exchange traded IPO funds, said in a recent interview.

Two important characteristics should distinguish the IPO market at the onset of 2017 from the conditions at the start of 2016: The pipeline will be more accommodating to new issues, and the valuations will be healthier than at the same time 2016.

"2017 has to be good," Smith said. "The returns are going to be good, and the new administration is doing things favorable to many companies that will be coming to the market." Specifically, the prospect of lower corporate taxes promises to benefit the kinds of companies -- smaller, domestically focused -- that typically make up IPO candidates.

Smith characterized 2016 as both the best of times and the worst of times. The best, inasmuch as the IPOs that were completed provided robust returns. That was, in large measure, because companies that made it through the rigors of the IPO process paid what amounted to an excise tax for the privilege: "They had to accept discounts to their publicly traded peers to make themselves attractive to investors," Smith said.

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If you throw out the lousy performance in the year's first weeks, when the residual effect of the tremendously volatile public market effectively shuttered the IPO market, the Renaissance index of IPOs outperformed the broader market. From mid February through the start of December, the Renaissance ETF returned 27% vs. a 21% performance by the S&P 500 over the same time period.

But the pipeline wasn't exactly wide open. "The supply of IPOs was the lowest since the 2008-2009 time frame," Smith said. By her calculations, three times as many companies wanted to come public as actually realized their IPO ambitions. The year figures to finish with just over 100 newly minted public companies.

"Private equity and venture funds are not in the business to hold assets forever," Smith said. "There are private companies percolating in portfolios longer than had been expected." That should create a fairly robust inventory of companies with IPO ambitions.