(BFM Stock Exchange) – A significant number of European digital economy companies has the potential to go on the stock market. However, these companies do not dare to throw themselves into the deep end, faced with many obstacles. However, there are advantages to be listed in Europe rather than in the United States, advances a report by French Tech Finance Partners.

Last year, the European Stock Exchange Market showed some signs of improvement, but this recovery was somewhat disturbed by the political context, noted EY in its latest “Global IPO Trends 2024” report.

The number of IPOs then registered at 125 units on the Old Continent in 2024, against 149 in 2023. And in Paris, the trend was particularly heavy, the number of companies that have chosen to enter on the stock market was limited to four in 2024 (excluding the split, two in number last year), two less than in 2023. In 2021, a splendid year in the matter, we counted no less than 33 operations.

This slowdown in the stock market IPTR in recent years has caused a traffic jam united in search of exit doors. “The more time passes, the more a large number of companies are forced to wait, accentuating this accumulation phenomenon,” points out the third French Tech Finance Partners report, published in late January.

This report aims to provide recommendations to support the development, in France and in Europe, of companies with high growth and with strong technological capital capable of competing with their American counterparts.

Many contenders for a fellowship

To date, nearly 140 innovative European companies whose valuation is greater than the billion dollars, have, according to this report, the potential to carry out an IPO. These would represent a total valuation of 430 billion euros. In France, nearly 30 companies have been identified by this report, with them collective cloakroom, Doctolib, Backmarket or Manomano to name a few.

This reservoir of potential candidates for an entry to the Paris Stock Exchange represents a total valuation of 65 billion euros, according to the report. For comparison, this amount represents more than twice the volume of IPOs in Paris over the past five years.

Many companies keep in mind the high valuations of 2021 and are not yet ready to introduce themselves on the stock market on the basis of a “more realistic” valuation, estimates the French Tech Finance Partners report.

However, the IPO, according to this document remains, remains an operation to be favored because it provides access to important capital. “France, and Europe in general, lack large -scale funds to support companies in their most advanced development phases (” late internship “), and this for structural and historical reasons (banished system, market European fragmented capital, etc.) “, notes French Tech Partners.

However, according to this report, only an IPO makes it possible to raise such important capital-coming from institutional, or savings of individuals which is to date “still underused on current accounts or booklets of unmultinating savings “.

“The liquidity of the capital offered by the IPO opens new financing prospects: it allows the remuneration of employees who have patiently waited (often more than a decade) before being able to exercise their options (vouchers of shares of business creator, stock options, etc.). Investment expenditure for research and development are crucial, in particular for AI -related projects), “adds French Tech Finance Partners.

Above all, the authors of the report point to the risk of seeing these companies favor a rating in the United States, rather than in Europe. They cite the emblematic example of Criteo, the pioneer of advertising targeting on the Internet which made the choice in 2013 to launch on the stock market in New York rather than Paris. The NASDAQ is indeed still perceived as a privileged reception land for these companies which can access more important funding thanks to a more receptive ecosystem on the other side of the Atlantic.

Which is even more true for large companies. American investors tend to better value large European companies, notes the report. The multiple business value relating to operating profit or for the benefit before depreciation, accounting depreciation, interest charges and taxes (multiple EV/EBITDA) become more favorable for European companies listed in the United States, especially for very large Companies (capitalization greater than 10 billion euros) where valuations clearly surpass those obtained in Europe.

On the other hand, in the “Small” and “Mid Caps” segment, European stock markets tend to be more generous. “For example, in the less than $ 1 billion segment in market capitalization, European stock markets offer European companies better valuations (multiple EV/EBITDA) than American stock markets: on average it is a difference of 1, 3 times the EV/EBITDA in terms of valuation, which is far from negligible, “said the report.

This attractive valuation is therefore an opportunity to exploit for technological companies.

Especially since in Europe, the report stresses that the IPOs have multiple “cash-on-Cash” (multiple carried out by shareholders on the basis of all outgoing and incoming cash flows, editor’s note ) 8 times, twice higher than those of mergers and acquisitions.

In other words, companies obtain a valuation twice upper when they introduce themselves as when they are bought.

This can be explained by a more rigorous selection of companies accessing the scholarship, thus guaranteeing a high quality of the side assets, notes French Tech Finance Partners.

“European companies are generally waiting for longer before they can go on the stock market, having to prove the solidity of their economic model as well as the effectiveness of their execution,” said the report.

By the way these multiple are higher than for European companies entering into the United States. At Wall Street, these multiples reach 6.1 times for the IPO and 3.4 times for buyout operations.

Improve exit routes

Also, according to French Tech Finance, companies that have carried out their introduction to Europe display, on average, higher stock market performance one year after their fellowship compared to European companies listed in the United States. On average, the performance at one year on Euronext is +7%, when performance in American stock markets (Nasdaq and Nyse) are -17%.

But, setbacks of the medal, access to European markets remains limited, regrets the report, taking into account the relatively limited size of the investment pockets which focus on the best assets.

“European companies also have difficulty finding reference investors who can facilitate and accelerate their IPO. It is therefore faced with this lack of funds and investor support, representing a major obstacle, that some European companies turn to the United States, where the depth of the market and the diversity of investors offer more outing opportunities, “said the report.

The case of the Paris Stock Exchange is glaring. Of the 67 IPOs that occurred between May 2019 and January 2025 (including those on Euronext Growth), only fifteen concerned companies assimilated to tech. However, this sector is however the most conducive to the IPO.

The report rents the depth of the Swedish stock market which is an example in this area. It is 2.6 times deeper than other European countries, thanks to a reform introducing a share of capitalization in addition to the distribution system with defined contributions. More than 16% of Swedish companies with more than 250 employees are listed and the volume of introductions since 2013 has exceeded those in Paris, Frankfurt, Amsterdam and Madrid cumulative.

“Facilitating rating in France makes it possible to trigger a virtuous circle: more companies on the Paris Stock Exchange means more jobs in France, more employees benefiting from stock options, and a possibility of reinvestment in new companies On the part of the venture capital funds “, hopes French Tech Finance Partners.