The Mega IPO Wave Is Back. Here's What's Next.

Good morning, ! This week we're diving into the return of Mega IPOs, add-on acquisitions continue to represent a significant share of global private equity buyout activity, private markets fundraise in 2025 toalized $1.3T. 

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DATA DIVE

IPO Watch: The Return of the Mega-IPO

After several years of subdued activity, the U.S. IPO market is showing signs of recovery. While issuance remains well below the record-setting pace of 2020 and 2021, a growing pipeline of large private companies suggests that the next chapter of the IPO market may be defined less by volume and more by scale.

The most striking development is the emergence of mega-IPO candidates. Companies such as SpaceX, OpenAI, and Anthropic have achieved valuations that far exceed those of many traditional public-company debuts. Together, they represent a new generation of venture-backed businesses that have remained private longer, raised unprecedented amounts of capital, and accumulated significant enterprise value before reaching public markets.

At the same time, recent AI-related IPOs have demonstrated the heightened volatility that often accompanies new listings. Companies such as CoreWeave, Figma, Ambiq, and others have experienced significant price swings during their first months as public companies, reflecting ongoing investor efforts to determine long-term valuations in rapidly evolving sectors.

Ownership data also highlights how much value creation now occurs before an IPO. Investors frequently hold 60% or more of mature unicorns, underscoring the increasingly important role private markets play in the growth journey of today's largest technology companies.

As the IPO window gradually reopens, all eyes will be on the next wave of venture-backed giants preparing to enter public markets.

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TREND TO WATCH

The Resilience of Add-On Acquisitions

Despite ongoing macroeconomic uncertainty, add-on acquisitions continue to represent a significant share of global private equity buyout activity. While total buyout volumes remain below the record highs of 2021, add-on deals have proven more resilient than larger standalone acquisitions.

The data shows that add-on buyouts reached $678 billion in 2025, up from $597 billion in 2024 and approaching the levels seen during the market peak in 2021. In contrast, non-add-on buyouts have experienced greater volatility, falling sharply after 2021 before recovering to $1.24 trillion in 2025.

This trend highlights how sponsors are increasingly relying on buy-and-build strategies to drive value creation. Add-on acquisitions typically offer lower execution risk, faster integration opportunities, and more predictable synergies than large platform deals. As financing conditions remain selective and valuations stay elevated, many firms are choosing to expand existing portfolio companies rather than pursue transformational acquisitions.

The takeaway: buy-and-build remains a core private equity playbook, helping sustain deal activity even in a more challenging investment environment. (More)

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DILIGENCE CORNER BY 150 DILIGENCE

AI as a Hidden Value Creation Lever

AI diligence is evolving from a technology review into a core value creation exercise. Increasingly, the most attractive targets are not those with the highest AI adoption today, but those with the greatest untapped AI potential relative to their operating model.

This creates an important distinction for sponsors. Businesses that are already highly automated may offer operational stability but often leave limited room for incremental improvement. By contrast, companies with fragmented processes, labor-intensive workflows, weak data infrastructure, and low digital maturity can present significant upside when paired with a disciplined AI transformation strategy.

The key diligence question is no longer, “How much AI does the company use today?” but rather, “How much EBITDA expansion could AI enable under sponsor ownership?”

The largest opportunities often exist where inefficiencies remain embedded in day-to-day operations. AI can automate workflows, reduce overhead, accelerate execution, and improve decision-making across pricing, procurement, customer acquisition, and service delivery. When integrated into the operating model, these gains can materially enhance productivity and margins.

As a result, companies with limited AI adoption today may offer the greatest investment upside. Under the right transformation plan, businesses starting from a low digital maturity baseline can generate outsized EBITDA growth and create value far beyond the initial opportunities identified during diligence.

Key Insight: The best AI opportunities may not be the most digitized companies—they may be the least. Untapped inefficiency is increasingly becoming a powerful source of sponsor-led value creation.

LIQUIDITY CORNER

Capital Keeps Flowing Despite Liquidity Challenges

Private markets continue to face a liquidity paradox. While distributions to limited partners remain below historical norms and many private equity-backed companies are being held longer than expected, investors are still allocating significant amounts of capital to the asset class.

Global private capital fundraising reached approximately $1.3 trillion in 2025, matching 2024 levels and remaining well above pre-pandemic fundraising totals. Although fundraising has declined from the record $1.6 trillion raised in 2021 and 2022, the market has shown notable resilience despite a challenging exit environment.

The persistence of fundraising activity reflects continued investor confidence in private markets' long-term return potential. However, the gap between capital raised and capital returned highlights the importance of improving exit activity. As M&A volumes recover and capital markets reopen, stronger liquidity conditions will be critical to sustaining fundraising momentum in the years ahead. (More)

MACROVIEW

AI's Labor Market Reality Check

Artificial intelligence has become one of the most discussed themes in business today, but the labor market data tells a more measured story. While nearly 80% of U.S. companies report using AI, most say it has had little impact on operations so far. The real question is not whether AI is being adopted, but how quickly it translates into meaningful changes in employment and productivity.

Current evidence suggests AI is affecting the labor market at the margins rather than driving widespread job losses. Recent college graduates and younger workers appear to be facing a more challenging hiring environment, particularly in occupations with higher AI exposure. However, these trends began before generative AI entered the mainstream, indicating that broader economic factors such as higher interest rates, slower hiring, and geopolitical uncertainty are also playing important roles.

History suggests technological disruption rarely results in a simple reduction of jobs. Ecommerce transformed retail employment but simultaneously fueled significant growth in logistics, transportation, and warehousing. AI is likely to follow a similar path—automating certain tasks while creating new opportunities, industries, and roles that do not yet exist.

For investors and business leaders, the focus should be less on total job losses and more on how AI reshapes workforce composition, productivity, and the locations where high-value work is performed. (More)

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