The Return of the Exit

Authors: Louis Lehot, Brandee L. Diamond

Louis Lehot
4 min readJan 30, 2024

Startups have found themselves pivoting significantly over the past year. Exit plans have either swiveled or been put on hold as valuations have remained low, and there has not been a huge market for M&A or IPOs. But there might be a shift coming in 2024 as there looks to be an improvement in exit options on the horizon. While we may not see the activity level we experienced in 2021, we could see an increase in deals and more exit options available.

First, let’s examine the outlook for IPOs this year. The CEO of Swedish Fintech, Klarna, has indicated to Bloomberg that the company might be looking at an IPO in the US “quite soon.” We know that 2023 was not a great year for IPO activity, with IPO volume down around the globe, but with more positive economic news as we sprint into 2024, could we see IPO activity pick up from major players like Klarna?

As early as August of last year, the US head of banking, capital markets, and advisory for a large Wall Street Bank told Yahoo! Finance he expected a real uptick in IPOs in 2024, possibly reaching a steady state level in the first half of the year. And 2024 is already off to a good start. MarketWatch reported that $1 billion worth of deals were expected in just one week of January, signaling an emergence from the long IPO dry spell.

In addition to Klarna, some other major players are being closely watched to see how they fare. This includes Reddit, which is reportedly seeking a valuation of around $15 billion for its debut, and Chinese fashion company Shein, which is being touted by some as the biggest expected IPO of 2024. Shein is reportedly looking for a $90 billion valuation, which would put their IPO around the top debuts ever. So, there is definitely a lot to be watching this year. Looking beyond 2024 to the following year, the hugely popular shapewear and clothing brand Skims (owned by Kim Kardashian) looks well positioned.

Regarding M & A activity, there is a positive outlook as we move into 2024. EY is predicting a gradual rebound in M&A markets this year. Their EY CEO outlook survey indicates a renewed CEO enthusiasm for deal activity, with 58% of CEOs surveyed planning to divest an asset over the next 12 months “as leaders seek to fund capital spending in multiple areas.” One notable finding from this survey is that every CEO surveyed was already or planning to significantly invest in GenAI.

Their Deal Barometer also shows growth in both PE and Corporate deals. The EY-Parthenon Deal Barometer estimates a 13% rebound in US PE deals in 2024. They note that this is still below the 2021 peak, but at the same time, it would be a faster growth rate than the average 9% pace we saw from 2010 to 2019.

On the corporate side, their Deal Barometer expects a gradual pick up in deal activity this year, with 12% growth predicted in 2024. This would be a return to more of a pre-pandemic activity level, coming in somewhere about 2% below the average number of deals in 2017–19.

Pitchbook has also released its 2023 Global M&A Report , and they are also positive when it comes to their 2024 predictions. While they found that 2023 was the second weakest year for M&A activity in the past decade, the total estimated M&A deal count was still the third highest on record. They also point to interest-rate cuts and public multiples sprinting ahead of private multiples as reasons to be optimistic about an M&A recovery this year.

There is a lot to look forward to in 2024 and beyond when it comes to deal-making. It might not be a return to the record-breaking activity levels we saw in 2021, but it will likely be a return to exit options for startups.

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Louis Lehot

Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley office. Follow on Twitter @lehotlouis