WILL TARIFFS AND TRADE PROTECTIONS HAVE AN IMPACT ON GOING PUBLIC?

One question which companies and investors alike need to be aware of, is the impact of any potential trade protections, such as tariffs, have on the financial markets. Assuming that such changes in trade treaties can be effective, the types of companies that will be able to have successful IPOs will be impacted. Both Trudeau and Peña Nieto have indicated their willingness to renegotiate NAFTA.

The purpose of these changes will be to protect American businesses and prevent or penalize the migration of companies from the US. The United States is the biggest consumer market in the world. Thus, you can expect foreign businesses to take one critical step in order to preserve their market share in the United States: emphasize US subsidiaries.

Of course, in light of the potential regulations that may be imposed, foreign companies will seek to do as little as possible, in order to avoid nationalistic trade protections. This might be a good year for IPOs of foreign companies in the United States, as they seek to establish a US presence and insulate themselves from the effect of these changes. We therefore believe that they will be a significant number of public mergers in the next few years between US public companies and foreign businesses, particularly Chinese and possibly Mexican, because companies from these two countries are the ones that seem to be targeted.