Companies That Had Their IPO in 1991: Recovery From a Recession

The IPO market in 1991 was a fascinating period in financial history, marking a significant transition from the exuberance of the 1980s to a more measured and cautious approach toward public offerings. The backdrop of this shift was characterized by the aftereffects of the 1987 stock market crash and a mild recession that affected the early 1990s, influencing the number of companies deciding to go public.

• Economic recession impact: The early 90s were marked by a brief (and mild) recession, which ended in 1991.

• Hesitancy to go public: Compared to the fervent activity of the mid-1980s the IPO market in 1991 was relatively cool, much in part due to the economic climate.

• Regulations: Tighter financial regulation and scrutiny added extra complexity for companies looking to go public.

The early 1990s recession exerted a profound impact on the stock market, mirroring the broader economic difficulties of the era. The lead-up to this recession was a time of significant stock market activity, with the late 1980s marked by robust performances, driven by speculative investments and an overall booming economy. However, this period of bullish markets eventually gave way to a more bearish phase, influenced by a convergence of challenging economic factors. Iraq’s invasion of Kuwait, the impact on the global oil market that followed, and Operation Desert Storm all added to the economic downturn.

The overall market sentiment was naturally significantly influenced by the pervasive economic uncertainty. This led to a risk-averse stance, resulting in reduced participation in the stock market, diminished liquidity, and increased volatility. The psychological impact of these factors was significant, with the fear of a prolonged economic slump leading to investors being cautious.

While the recession in the early 90s was global and brought with it a severe impact on the economy, it was also brief and relatively mild. Officially, the recession lasted between June of 1990 to the beginning of March 1991, and going into the latter half of the year investors were beginning to become cautiously optimistic. But while the stock market recovered, companies remained hesitant about going public.

During 1991, the IPO market was significantly affected by a combination of market volatility, investor sentiment, regulatory changes, and corporate caution, all of which contributed to a relatively cool climate for public offerings compared to the previous years. The period was rife with market volatility, largely due to global and domestic events, including the lingering effects of the Gulf War. Investor sentiment during this time was also markedly risk-averse.

In response to these conditions, many companies were hesitant to pursue IPOs. The prospect of achieving a lower-than-expected valuation was a significant deterrent, particularly for firms that would struggle to justify their worth in a skeptical market. Concerns over receiving a lukewarm market reception or encountering outright disinterest made the prospect of going public less appealing.

One of the most telling statistics about the sentiment around IPOs in 1991 is the fact that only roughly 30 companies in the U.S. went public in Q1. With the recession easing and optimism returning, the amount of companies seeking public listings would increase gradually throughout the year.

The regulatory landscape post 1980s also played a crucial role. After a decade marked by high-profile financial scandals and speculative excess, regulators tightened the reins. This increased scrutiny made the IPO process more arduous and costly, deterring some companies from pursuing a public listing. The heightened regulatory requirements, intended to protect investors and maintain market integrity, inadvertently added layers of complexity and cost that some businesses preferred to avoid.

This confluence of factors—market volatility, the aftermath of the recession, investor caution, regulatory tightening, and the resultant corporate hesitancy—collectively cooled the IPO market in 1991, marking a significant shift from the fervent activity of the mid 1980s. Companies were weighing the risks and opted more often than not to delay public offerings (especially in the first half of the year), seeking stability and clarity in a landscape that offered little of either.

While many companies hesitated to go public and the general mood towards IPOs was hesitant, there were still several notable companies that had their IPO in 1991.

The casual dining chain Applebee’s had its IPO in 1991. In 2007, it was acquired by IHOP and the two chains merged to form Dine Brands.

The American semiconductor company Qualcomm was founded in 1985 and had its IPO just six years later. Today it’s a well-established and integral part of the global semiconductor industry.

Old Dominion Freight had its IPO in 1991 and is today one of the largest Less-Than-Truckload shipping companies in the U.S.

Biogen went public in 1991 and is today a well-established global pharmaceutical company.

The retailer of automotive aftermarket parts AutoZone had its IPO in 1991. Today, it's one of the leaders in the sector and is active primarily in the United States and parts of Central and South America.

Further reading: AutoZone's Rise to Dominance and Aggressive Stock Repurchases

The IPO market of 1991 was reflective of an economy and an investment community that were both in transition. The 1980s had seen a flurry of public offerings, driven by high-flying valuations and an almost unshakable confidence in perpetual growth. By contrast, 1991 was a time for reassessment, as both companies and investors were recovering from the recession.