Goldman Sachs CEO David Solomon forecasts an end to the prolonged IPO drought, expressing optimism about a rebound in the market.
Speaking alongside Cisco CEO Chuck Robbins at a summit in Silicon Valley, Solomon remarked, “It’s going to pick up. It’s been slow, it’s been turned off.” His comments come after Goldman delivered impressive quarterly earnings, surpassing analyst expectations.
The tech IPO scene has significantly stalled since late 2021 due to inflationary concerns and rising interest rates, compounded by strict regulations limiting M&As for large tech firms. However, Solomon perceives a shift in sentiment, with renewed activity anticipated in both IPOs and M&As. “We have a more constructive kind of optimism, which always helps,” he noted, projecting a healthier business landscape ahead.
Solomon acknowledged that the election of President-elect Donald Trump and the return of Republican power in Washington are already influencing the business environment positively, fostering increased M&A activity supported by a regulatory landscape that is more conducive to dealmaking. He cited a significant backlog from sponsors, signaling a burgeoning appetite for transactions.
Despite the S&P 500’s notable two-year performance streak, supported by a tame inflation report, IPO activity remains tepid, evidenced by ServiceTitan’s December debut as a rare venture-backed exception since April’s Rubrik. Solomon highlighted that companies are beginning to recover valuation-wise post-2021.
While Solomon is optimistic, he acknowledged the structural challenges of going public, reflective of the drop in public companies from around 13,000 two decades ago to just 3,800 today. He pointed to increased disclosure requirements and the ample availability of private capital as significant deterrents. “It’s not fun being a public company,” he candidly admitted, questioning the appeal of becoming publicly traded amidst these hurdles.
