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Goldman Sachs chief David Solomon has warned private companies to take “great caution” before deciding to go public, adding that the depth of capital in private markets has removed the need for many to list at all.
“Today you can get capital privately, at scale . . . you can also get liquidity in the private markets. So the reasons to go public, when you really reach an incredible scale, are getting pushed out,” said Solomon at the Cisco AI Summit in Palo Alto.
“If you are running a company that’s working and it’s growing, if you take it public, it will force you to change the way to run it and you really should do that with great caution,” he added.
Goldman’s role as a trusted IPO partner has been at the core of its business for years, but that market has slowed since 2021 in response to rising interest rates. The bank is increasingly supplying its services to very large private tech companies that have pushed off public offerings.
Goldman helped Stripe raise $6.5bn in 2023, enabling the payments company to remain private for longer. Solomon said such deals were part of “a more fundamental, long-term secular trend” of shrinking numbers of public companies.
The largest start-ups, including Stripe, artificial intelligence group OpenAI and Elon Musk’s space exploration company SpaceX, have held off from listing despite swelling valuations in the tens and even hundreds of billions of dollars.
They have found increasingly deep wells of capital, tapping venture capital behemoths such as Josh Kushner’s Thrive Capital and sovereign wealth funds in the Middle East and elsewhere. They have also found ways for employees to cash out their stock in the secondary market.
In doing so, they have minted a new type of private “start-up”, with the scale and sophistication of a public company but lacking the scrutiny and reporting obligations that come with life on the public markets.
“It’s not fun being a public company,” said Solomon. “Who would want to be a public company?”
But given the growing importance of private capital, he added: “You have got to ask questions around why we have different standards when you have the same people buying things publicly and privately.”
Solomon, Goldman’s chief since 2018, also spoke about the impact AI would have on his company’s businesses and those of his clients.
The bank now has 11,000 engineers among its 46,000 employees, according to Solomon, and is using AI to help draft public filing documents.
The work of drafting an S1 — the initial registration prospectus for an IPO — might have taken a six-person team two weeks to complete, but it can now be 95 per cent done by AI in minutes, said Solomon.
“The last 5 per cent now matters because the rest is now a commodity,” he said.
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