The results of Edelman Smithfield’s most recent Investor Pulse survey paint a clear picture of expectations for a U.S. IPO market that is poised for recovery. Download a copy of the report to understand more about how investors are assessing quality investments in today’s environment. Findings include:
- A significant increase in appetite from investors for new issuers, even when compared with the unprecedented IPO boom in 2020-2021
- Notable new parameters for evaluating quality investments
- Valuation is being driven by EBITDA, with free cash flow becoming increasingly important
- The importance of new shareholder engagement within the first year of being public
Participants included more than 100 U.S. investors, including chief investment officers, portfolio managers and buy-side analysts, who are directly responsible for or directly contributing to decisions regarding an institution’s investable assets. Of the participating investors, at least 50% work for investment firms with assets under management of $50bn or more.
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How Investors are Currently Defining Quality
Low Leverage
Investor appetite for highly levered companies has dropped significantly since 2021
Balanced Financial Profile
While current profitability is not required, quality of future earnings remains critical to evaluating future performance; free cash flow has also become more important for valuing opportunities
Limited Private Ownership
Despite aversion to high debt levels, investors rank paydown of equity sponsorship above debt repayment when it comes to uses of capital
Strong Governance
Board structure is top of mind for investors with recent Board refreshment and Board diversity named as top attractors
Insights
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