We've seen some variability in the markets this year. Exchanges hit multiple record highs in the first half. Then, in August, the Chicago Board Options Exchange Volatility Index (VIX) spiked briefly before dipping back below 20.[i] The next month, the Federal Reserve lowered interest rates.[ii] Panelists have had their hands full helping corporate, financial sponsor, and venture capital clients make sense of this choppy market. The group swapped insights about the impact on valuations and what that means for companies preparing for a transaction in the next six to 12 months. The consensus? It can take up to 24 months to get ready to operate as a public company. So pre-IPO companies aiming for the next IPO window should take the time now to get their house in order.

Saqib Iqbal Ahmed, “Wall Street fear gauge in record retreat after last week's massive spike,” Reuters, August 14, 2024, https://www.reuters.com/markets/us/wall-street-fear-gauge-record-retreat-after-last-weeks-massive-spike-2024-08-14/
Board of Governors of the Federal Reserve System, “Federal Reserve issues FOMC statement,” September 18, 2024, https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm.

In this session, panelists discussed what venture capital-backed companies were doing to shore up their balance sheets. Many companies were evaluating alternative financing as they waited for market activity to pick up. In any case, between recent reductions in interest rates and substantial amounts of dry powder, the group expected investment activity to rise in the next year or two.

With financing more expensive, many private equity investors stayed on the sidelines last year. But the liquidity spigot began to trickle again in 2024, amid growing sentiment that the worst of the deal making slump may be over. Still, according to panelists, many companies were looking at alternative liquidity options. A growing number of inside rounds and down rounds were closing as expansion-stage companies sought out more efficient financing. Acquisitions remained favored over public listings. But with the economy cooling after a prolonged battle against inflation, the group saw valuations and M&A volumes ticking upward in 2025 as acquirers reapproach opportunities for inorganic growth.

Although tech startups in general have been slow to go public, panelists agreed that artificial intelligence (AI) companies may be the ones to break the impasse. Venture funding has been flowing into the AI market, with several closely watched AI-driven companies possibly hitting the exchange in the near future.AI technologies were also expected to disrupt the investment management sector itself. Some firms were piloting generative AI solutions to support more informed investment decisions, for example. But many organizations may be left to determine how to effectively harness AI solutions at scale without prior examples to guide them. Those that fall behind in successful AI adoption may find it challenging to remain competitive, because efficiency in investment management operations could drive alpha as well as margin enhancements.

Chief financial officers shared key lessons from their own experiences ushering companies through a public debut. The discussion ranged from rating items to work on early in the IPO process, to perspectives on managing the dual mandates of running a business while going public.Panelists agreed that CFOs should be ready to clearly articulate the company's growth story, which can evolve over the course of going public.CFOs should also develop the capability to consistently develop and meet internal forecasts as well as determine relevant key performance indicators and other metrics to report upon. Finally, don't underestimate what it takes to support the aggressive close, consolidation, and report demands of public companies.