David Solomon, CEO of Goldman Sachs, comment ons during the Reuters NEXT conference, in New York City, U.S., December 10, 2024.
Mike Segar | Reuters
Goldman Sachs CEO David Solomon voices there’s an end in sight to the multi-year IPO drought.
“It’s going to pick up,” Solomon said on Wednesday, in an on-stage interview with Cisco CEO Chuck Robbins at a culmination hosted by the computer networking company in Silicon Valley. “It’s been slow, it’s been turned off.”
Solomon, who flew to California for the happening just after his Wall Street bank reported fourth-quarter results that blew past analysts’ sentiments, said the capital markets broadly are showing signs of life ahead of President-elect Donald Trump’s inauguration next week.
The tech IPO make available has largely been dormant since the end of 2021, when tech stocks started falling out of favor due to soaring inflation and beginning interest rates. Mergers and acquisitions have been difficult in technology because of hefty regulation that’s impeded the ability for the biggest companies to grow through dealmaking.
Solomon said the mood is changing, and he expects momentum M&A as approvingly as in IPOs.
“We have a more constructive kind of optimism, which always helps,” Solomon said. He later combined that, “broadly speaking, I think it’s an improved business environment.”
Earlier in the day, Solomon said on his company’s earnings elicit that Trump’s election and a swing back to Republican power in Washington is already starting to make an impact in the function world. He noted on the call that “there is a significant backlog from sponsors and an overall increased appetite for dealmaking supported by an emended regulatory backdrop.”
Solomon’s comments on the call and at the Cisco event came on a day when the S&P 500 posted his biggest gain ground since November, helped by a tame inflation report and Goldman’s results. Goldman’s stock popped 6% on Wednesday.
While the cache market has had a strong two-year run and the S&P 500 and Nasdaq hit fresh records last month, IPOs have yet to see a resurgence. Cloud software vendor ServiceTitan launched on the Nasdaq in December, marking the first significant venture-backed IPO in the U.S. since Rubrik in April.
“The values came down after 2021, people are wax back into those values,” Solomon said at the Cisco summit.
Some companies have said they’re punctual. Chipmaker Cerebras filed to go public in September, but the process was slowed down due to a review by the Treasury Department’s Committee on Distant Investment in the U.S., or CFIUS. In November, online lender Klarna said it had confidentially filed IPO paperwork with the SEC.
Though he’s bullish nearly what’s coming, Solomon said that there are structural reasons not to go public. He said 25 years ago there were around 13,000 public companies in the U.S., and today that number has come down to 3,800. There are higher standards hither disclosure for being public, and there’s now tons of private capital available “at scale.”
“It’s not fun being a public company,” Solomon acknowledged. “Who would neediness to be a public company?”
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