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 the ones past. 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 of initial public offerings and their performance, and 2025 has been OK.
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), 2022 (181) and 2023 (154).
Katherine Frank is a capital markets partner in the Dallas office of law firm 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.”
She can’t reasonably be faulted for the optimism.
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.
But amid the attention devoted 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 have increased their presence in the M&A marketplace.
The decline in IPOs cited earlier is not a recent phenomenon. The 344 IPOs issued this year are less than a third of the 1,035 offered in 2021, a halcyon year in nearly all forms of corporate transactions. But since 2020, only one year (2020) has seen more than 400 IPOs, and only three years have seen 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 as fewer companies go public, there are fewer public companies. In 1996, 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 of regulation in the decline of capital markets is exaggerated.
Studying the behavior of public companies at the thresholds of securities regulation, the authors concluded that government regulation accounts for only 7.3% of the decline in IPOs. 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 game maker 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, but it also lends. This year, private debt assets are expected to reach $1.7 trillion, about 11% 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 a more complex — and, in some ways, more satisfying — role for the capital markets lawyer.
