VC and PE-backed startups could witness an uptick in IPO activity if the macroeconomic environment stabilizes, interest rates start reducing, and startup founders and investors could reach a consensus on valuation figures, per Pitchbook.
E&Y's IPO and SPAC market advisory leader Mark Schwartz said that IPO markets follow a "V-shaped" recovery curve. Morgan Stanley's Nash Waterman expects the IPO market to show signs of recovery in the second half of 2023.
- An earlier EY report analyzed the recoveries after the dot-com crash and the 2008 financial crisis and found that IPO listings recovered within 24 months and 18 months, respectively.
- Waterman said that there is a positive correlation between public stock market performance and listings.
- IPO activity in the current quarter to date has already shown an improvement over the preceding quarter, with nine IPO listings completed within the first two months of 2023 already compared to Q4 2022's tally of five.
- IPO exit value for U.S.-based VC and PE-backed startups totaled $1.7B in Q4 2022, a sharp decrease from the $171.1B total from the same quarter in 2021.
