Marc, John, what are the top line trends that are driving capital markets, and how are you advising clients in this time of uncertainty?
Yeah - a big theme that we're seeing is sponsor activity. The sponsors are under a tremendous amount of pressure to both deploy capital as well as to return capital to LPs.
Dry powder at a trillion three is at all time highs. There's over 3 trillion of unmonetized, private equity that's sitting in
portfolio companies. And that's creating a logjam which is effecting fundraising for the sponsors as well.
Last two years, fundraising has been down. The first thing we're seeing is on the deployment side, we're seeing a significant step up in
deployments, on the public to private side with respect to Hologic, EA, Senior PLC, but also participation in corporate carve outs, like the PJM assets out of Constellation Energy as well as, BASF coatings business that's being bought by Carlyle.
But the real juice here the real excitement is around exits. So, John, when's the last time we saw this level of IPO pitching?
We went into ‘26 with as big of a pent up IPO backlog as we've seen in many years, maybe since Covid.
And while that, backlog is still there, the windows have not really opened up at the rate we had expected so far this year,
We have though, recently toward the end of March, early into Q2, seen a real emergence of IPO product to supplement what we had seen in follow on activity and convertible activity, in private markets activity.
But the real story for many companies has been get prepared, find a way to be ready when and if the windows that work for your company emerge.
Yeah, I was on the phone the other day with the CEO of a company who asked me exactly that.
Could their company go public today?
And this is a scaled business, it's performing, and a company like that in general can go public whenever they want.
But for him and for his stakeholders, it's really a question about can they establish the right valuation that's consistent with the positioning of the company, and can they attract the right shareholders that will both endorse that valuation at the time of the IPO, but also allow it to expand as the company executes over time?
So that kind of nimbleness and readiness is really important.
The other thing he asked me about, which I'd be interested in your guys’
perspective on, is how AI is going to affect his offering and affect his valuation.
What are your thoughts on that?
He's right to be concerned and focused on that. We joke that, you know, all of a sudden, investors now are focused on companies that make
things again.
There's less focus on SaaS, and there's less focus on ARR. And it's all about the picks and shovels that are fueling the AI ecosystem as well as the electrons to power it.
Well, it's interesting to hear you talk about it because the other thing that people think about are whether or not portfolio managers are going to have concentration issues by playing AI and your discussion around how you can play it indirectly and thematically, kind of creates that diversification.
The other thing that people are worried about is some of these large IPOs that will come later this year, and how they're going to affect the liquidity in the market generally, and if they're going to impact other companies ability to go public.
Yeah, it's a debate that's raging both on our desk downstairs and also in all investor conversations.
I think that's healthy, quite frankly, that they are having that discussion, because that means that nobody will be surprised when the time comes to write the big check.
My view is that there's ample liquidity out there to absorb what could be some of the biggest IPOs that we've ever seen and that the appetite, both from institutional investors and retail investors is very strong.
So, just listening to the two of you, actually, it sounds like this is an environment that really demands solutions that are really thinking across the capital structure and delivered by capital markets professionals who have the execution judgment and ability to provide that advice, and that's really what clients are looking for today.
