More European companies are preparing to list in the US because of perceived better valuations, deeper pool of liquidity and prestige; however, the grass is not always greener across the pond.

This newswire reported on the upcoming IPOs of EG Group, eToro, Klarna, and Carlyle and GIC-backed Nouryon, all likely destined for New York in 2025.

Despite the pipeline of European firms looking west, the volumes of EMEA headquartered businesses listing in the US fell from USD 8.1bn in 2023 to USD 3.2bn last year.

However, this disparity is a little deceiving, given 2023 volumes were driven primarily by the USD 5.2bn IPO of UK semiconductor giant arm [NASDAQ:ARM], the number of companies listing in the US this year increased.

Last year, two European companies listed in the US in deals valued at USD 500m and above, namely Kaspi.kz JSC [NASDAQ:KSPI], raising USD 1bn, and Amer Sports, Inc. [NYSE:AS], raising USD 1.6bn.

“We are still seeing a lot of interest in the US as a listing venue,” a global ECM banker said. “European returns were seen as less attractive than US returns, plus the macro picture in Europe is less compelling and some concerns on ongoing basis on certain liquidity in certain regions and exchanges.”

Despite this, the US is not all a bed of roses. Companies based in the US are more vulnerable to litigation, for example, an ECM lawyer said.

“Additionally, the US is not the right fit for everyone, especially if a company lacks a US presence or significant US revenues, a US listing often doesn’t make sense,” the lawyer said.

Notably, this newswire reported this week that Visma, a Norwegian software company backed by Hg, was leaning towards listing in Europe because the firm’s revenues are primarily concentrated in Europe and Latin America, with very little exposure in the US, despite several advisory sources pitching the possibility of a listing there to take advantage of the large pool of tech investors.

Additionally, listing on Nasdaq requires scale and companies with less than USD 100m ARR may struggle to gain traction on a US exchange, according to Ariel White-Tsimikalis, capital markets partner at Goodwin. This limits the profile of companies able to issue on that market.

“However, this also presents an opportunity for Europe to attract growth firms seeking listings at an earlier stage in their lifecycle,” White-Tsimikalis said. “European markets can serve as a strategic stepping stone for companies with long-term ambitions to eventually list on Nasdaq.”

The figures of cross border IPOs to the US over the last two years, have failed to achieve the hights of 2021, when volumes hit USD 22.4bn.

While a recovery to those levels is not expected in 2025, market participants remain optimistic that improved macro conditions will drive a recovery in cross-border listings in the near future. But European firms need to be cognizant of the regulatory complexities, litigation risks, and strategic fit concerns.