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We were optimistic last year about the IPO window opening. Hope glimmered as recently as last month, when a handful of high-profile IPOs priced or revealed plans to go public. And in addition to the SEC’s focus on capital raising, the House Financial Services Committee held a hearing in late March to discuss 40 bills aimed at improving access to private capital for companies across the country – as well as making public offerings more viable. Some of the proposed bills would extend accommodations for emerging growth companies and smaller reporting companies, for example. That’s encouraging!

But the tumbling stock market has put a damper on those efforts. This Business Insider article reports that some previously expected deals are taking a pause. The article also discusses the extended IPO slump that we’ve experienced over the past few years. Here’s an excerpt:

But now, the long-anticipated boom in IPOs has suddenly gone bust. CoreWeave’s public offering in March was the biggest tech IPO since 2021, but it was forced to price itself well below the expected range. And on Friday, StubHub and Klarna both announced they were putting off their planned IPOs, as Donald Trump’s tariffs sparked a huge slide in the stock market. IPO analysts at Renaissance now estimate that there could be as few as 150 deals this year, which would make 2025 the fourth straight down year for IPOs.

In addition to the market freefall, the article points to a lack of sell-side analysts, economic uncertainty, availability of private capital, and investors’ unrealistic expectations for IPO payoffs as pre-existing contributors to the low number of offerings. Companies could overcome that last issue by lowering their valuations, according to the article – which cites Klarna as an example of doing this successfully even though it is painful for early investors. It also says that some analysts are still holding out hope for an IPO rebound in the second half of this year.

Last week, Dave reminded us of 5 topics that existing public companies should consider as we make our way through this period of market uncertainty. The companies pumping the brakes on public offerings also have a few things to think about. Those that were already far down the IPO path are no doubt receiving a lot of tailored guidance from their bankers and lawyers. For those earlier in the process, I’d offer these thoughts:

1. Dual (or triple) track your options – The IPO window might reopen. But volatility also seems to be the “new normal.” IPO readiness is no quick feat, and you don’t want to be caught flat-footed. Consider shoring up your internal processes, understanding financial statement requirements for public offerings, and continuing with governance prep and other IPO readiness steps – while also seeking other exit or funding opportunities.

2. Stay well-capitalized – Depending on the circumstances, some companies will shift their attention towards a sale, while others will want to move ahead with other debt or equity financings to support their business strategies. This 2022 Wilson Sonsini playbook for late-stage private companies also recommends “prudent financial stewardship” and incentivizing employees.

3. Keep tabs on market and regulatory developments – Keep monitoring the performance of publicly traded peers so that you can recalibrate expectations about valuation and messaging for a future IPO or other financing. The SEC’s 44th Annual Small Business Forum – which is coming up this Thursday and includes our own Dave Lynn as a speaker – will be a great opportunity to hear from regulators and other small businesses about how they’re approaching capital raising requirements and opportunities.

4. Remember the big picture – The talking heads always emphasize during these downturns that the markets continue to eventually increase over time. An IPO may continue to be worthwhile, even in a down market, if the funding lays the groundwork for a bigger and better exit event. But also make sure to think through how your time as a publicly traded company would play out in terms of voting control, the activism threat landscape, etc.

– Liz Dunshee