The capital markets landscape experienced dramatic shifts over the past year, as companies grappled with market volatility, changing investor sentiment, and evolving windows of opportunity. In our recent ICR Conference Spotlight Series webinar, leading capital markets experts shared insights on how companies should approach IPOs, secondary offerings, and investor relations during these uncertain times.
Market recovery shows promise
The IPO market shows early signs of recovery, according to Alice Takhtajan, Managing Director and Head of Technology, Media, and Communications Equity Capital Markets at JP Morgan.
“Five IPOs have priced since late March, and encouragingly, all of those transactions are trading up in the aftermarket,” she said. This positive momentum, combined with declining volatility (the CBOE Volatility Index dropped below 20 after peaking around 52 in mid-April) suggests the market may be healing.
The secondary market has been particularly active, she explained. “Last week was one of the most active weeks so far this year; $12 billion was raised in the equity markets across all products,” she said. This activity spans IPOs, follow-ons, and convertibles, pointing to broad-based investor appetite for well-positioned companies.
Fundamentals still matter most
Even during market volatility, business fundamentals matter most. “Those key ingredients that make for a compelling investment value proposition still count,” said ICR Partner Farah Soi, who leads the company’s consumer group. “A differentiated business positioned for growth, an attractive total addressable market, a healthy industry backdrop, and a credible management team.”
At the same time, however, investors have raised their expectations. “The hurdles are higher,” Soi said. “The appetite is there for good quality growth companies at the right price, but for companies that have been public before and struggled or are highly levered, the burden of proof is on them to present a compelling case for why it’s different this time.”
Strategic timing in a window-driven market
In a volatile market, companies can no longer rely on the traditional IPO calendar. “It’s important to view this as a market of windows,” said David Levin, Co-Head of Equity Capital Markets at Guggenheim Securities. In response, companies should stay ready. “While it’s a big burden on organizations, staying ready is the most effective way to be in a position to access the market when it’s available.”
This shift requires companies to maintain constant preparedness, rather than target traditional seasonal windows. Companies can use this time, for instance, to conduct mock earnings processes and ensure their teams are ready for the demands of public company reporting.
Evolution of IPO preparation
Along with that shift in IPO timelines, the investor education process has evolved. Companies should now start engaging investors at least a year — but sometimes two or three years — before their target IPO date. “What we consider best practice is at least two rounds of investor education, but more often it’s closer to three if not four rounds,” said Takhtajan.
This should include various touchpoints, such as industry conferences, non-deal roadshows, and organized testing-the-waters events. The goal is to build relationships with a core group of 30-50 top investors who can ultimately anchor the IPO.
Communication during volatility
Especially during tumultuous economic times, many companies experience setbacks. During those challenging periods, transparency is key. “Own it, articulate what the issue was, diagnose the issue, share your treatment plan,” Soi advised. “And then the prognosis can still be quite positive.”
Companies should focus on communicating long-term strategy and providing investors with the information they need to properly evaluate the business, even if short-term guidance becomes less meaningful. This will help maintain investor confidence while acknowledging and addressing near-term challenges.
Alternative financing gains traction
Convertible bonds have become a compelling alternative in this environment, with coupons close to 0% and attractive premiums. Takhtajan noted that convertibles can serve multiple purposes, from bolstering the balance sheet to raising capital to pre-fund potential mergers and acquisitions.
This flexibility makes convertibles particularly valuable for companies seeking financing while traditional equity markets remain volatile.
Looking ahead: key success factors
As markets continue to stabilize, companies should keep the following in mind when planning capital market activities:
Preparation is paramount: Companies must be ready to move quickly when windows open, with all documentation, investor relationships, and internal processes in place.
Quality trumps timing: Well-capitalized companies with strong fundamentals and proven management teams can find receptive investors even during volatile periods.
Transparency builds trust: Open communication about challenges, mitigation strategies, and long-term vision helps maintain investor confidence through difficult periods.
Flexibility is essential: Companies should consider various financing options, from traditional equity to convertibles, based on market conditions and their specific needs.
Even amid some remaining uncertainty, the capital markets show signs of recovery. Companies that maintain readiness, focus on fundamental strength, and communicate transparently with investors will be best positioned to capitalize on emerging opportunities.
As Takhtajan concluded, “If you are getting ready to raise capital, be prepared early and be opportunistic. Windows can open and close very quickly, so determining what you can do ahead of time and really thinking about your plan and strategy can be incredibly valuable in this environment.”
The road ahead requires patience, preparation, and strategic thinking, but companies that execute well can reap the significant rewards of entering the public markets. Download the full webinar replay to get deeper into the details of navigating today’s market.
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