Mad Money

This missing market component worries Cramer

Cramer on the state of the IPO market

(Click for video linked to a searchable transcript of this Mad Money segment)

There's something missing in the market, and Jim Cramer doesn't like it.

In fact, he finds it very concerning.

It's the lack of mergers and acquisitions happening in the sectors where a slew of companies have just gone public. "If business were that good, I think some of these companies would have been gobbled up already," he said.

That is, the "Mad Money" host is convinced that after the financial crisis, many large companies in corporate America have gotten themselves into excellent financial health. And, he believes, if the smaller companies that recently went public were facing such outstanding opportunities, larger rivals would have used their cash to acquire these smaller firms, long ago.

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"Think about it, if had anything proprietary, wouldn't Amazon have made a move? McDonald's is so desperate for a natural food play, how did it let ?" said Cramer.

But none of that happened.

If these companies really presented value, "They should have been purchased before they came public. The fact that they weren't suggests to me that industry players don't value them as much as the public markets."

That's no good.

Typically, Cramer says, the industry knows much more about value and opportunity than the Street.

In turn, Cramer fears valuations of these newly public companies assigned by the Street, may be excessive. "I worry these companies simply aren't as good as these myriad positive analysts think they are."

And to make matters more perilous, lock-ups are starting to expire, which will bring more shares of these companies onto the market in the weeks and months ahead.

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All told, Cramer sees every reason to fear a decline.

Should M&A activity involving some of these IPOs pick up, then Cramer would feel differently. He'd take that as a sign that the industry sees value.

"But until they go back down to where they make sense to be acquired I think the overhang from these new companies is going to cause a real problem for the market," Cramer said.

Call Cramer: 1-800-743-CNBC

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