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| The Weekend Pitch |
| VC, PE and M&A |
| Presented by Deloitte |
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| (Josie Doan/PitchBook News) |
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When Five Point Infrastructure decided to cash in on a long-held water management business, the Texas-based private equity manager had little doubt that going public was the move.
This degree of conviction might seem counterintuitive. PE funds have typically preferred the full realization of an M&A deal to help them return capital to investors within the 10-year fund life. They don't necessarily want to grapple with the hassle of staged equity sell-downs and hefty compliance costs. They don't want to contend with lockup periods, which mean it can take several years to fully exit a portfolio company.
I'm Madeline Shi, and this is The Weekend Pitch. You can reach me at madeline.shi@pitchbook.com or on X @Madelin94615831.
Historically, IPOs have accounted for a single-digit share of PE-backed exits in the US. Even during the 2021 boom, when IPO exits peaked, they represented only 7% of the total number of PE-backed exits that year.
But for Five Point's WaterBridge Infrastructure—which handles wastewater from oil and gas production and counts upstream operators like BPX Energy and Chevron among its clients—an IPO offered the clearest path to achieving a valuation that reflects the company’s true worth, said Five Point CEO and managing partner David Capobianco.
"We understood where the M&A market was without having to test it," he said. "And we knew that we would be able to educate the [public] market and show investors how WaterBridge should be valued much more dearly than that."
In Capobianco's view, strategic buyers "will look at what's happened historically to determine your valuation." Public investors are receptive to a compelling growth story and are inclined to pay higher premiums.
In M&A, financial sponsors or corporate buyers tend to apply a more disciplined underwriting process, pricing a target via thorough due diligence on its earnings or operational fit, says one senior sell-side adviser. In contrast, institutional fund managers and retail investors may buy a company based on a growth narrative, market momentum or simply the hype surrounding a new offering. The risk is that public investors end up overpaying.
Sensing this sentiment, PE firms are increasingly willing to take the extra effort and prepare for public market exits, especially for businesses that benefit from secular growth trends such as AI and energy infrastructure, advisers noted.
Some PE firms are beginning to explore a triple-track process—weighing an IPO, M&A and continuation funds simultaneously. |
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| Catching the wave: The PE portfolio CFO’s role in maximizing value on exit |
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The role of the CFO has never been more challenging—with increasing demands and expectations layered on top of their core role as ‘guardian of the numbers.’ These challenges are heightened in a private equity (PE) context, with responsibility for planning and leading the exit process typically falling to the CFO.
So what should portfolio company CFOs be doing to ensure that they are in a position to maximize exit value and successfully ‘catch the wave’ of anticipated PE exits?
To answer this question, Deloitte conducted over 200 one-to-one interviews throughout 2024 with CFOs and CEOs of PE portfolio companies, as well as operating partners and deal team members from both large-cap houses and mid-cap investors around the globe.
Learn more |
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PE firms are taking more of their portfolio companies public this year, capitalizing on an improving market environment that VC-backed companies have also been leveraging. Through the first three quarters of 2025, more PE-controlled companies have gone public than did in 2024. How many PE-owned companies have gone public in the US so far this year?
A) 100
B) 47
C) 20
D) 75
Find your answer at the bottom of The Weekend Pitch! |
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AI stays in driver's seat for US VC
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AI continues to fuel US VC, representing nearly 40% of dealmaking in Q3. It's also driving funding, with nearly every $1 billion-plus deal in the asset class focused on AI.
But the surge in exits has been less exuberant, according to the Q3 2025 PitchBook-NVCA Venture Monitor, sponsored by J.P. Morgan, Dentons and EisnerAmper. Despite several high-profile public debuts, the IPO market is pacing to end 2025 on par with the past few years. |
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Dealmaking frenzy propels US PE
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PE has emerged from the haze of uncertainty as it looks to put its best foot forward.
Dealmaking remains elevated, and overall funding has already surpassed 2024. The improving sentiment for exit activity has set the asset class up for year-over-year growth.
Greater market clarity and a September rate cut, with the potential for more in Q4, have set PE up to end the year on a high note. Our Q3 2025 US PE Breakdown covers the latest trends—including areas of momentum, and weaknesses that could challenge sponsors into 2026. |
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Keep an eye out for these insights and research reports coming out this week:
- Analyst Note: European DefenseTech Overview
- Q3 2025 Healthcare Services Comp Sheet and Valuation Guide
- Analyst Note: Stablecoins are Imperfect but Inevitable
- Q3 2025 Enterprise SaaS Public Comp Sheet and Valuation Guide
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| (Jenna O'Malley/PitchBook News) |
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"We have people who have previously been vocally, completely against the technology come to our studio in the last few weeks, asking, 'Ok, how do we start thinking about this?'"
—Naeem Talukdar, co-founder and CEO of AI video generation startup Moonvalley, which is taking a self-proclaimed "ethical approach" to woo Hollywood studios and skeptics. In her latest, Rosie Bradbury sat down with Talukdar and explored his own skepticism surrounding AI, how Hollywood is slowly changing its tune on AI and how Moonvalley plans to beat Sora and Runway. |
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Answer: C.
Twenty US-based companies under PE ownership have gone public through Q3, surpassing last year's full count of 18. And in Q3 alone, eight PE-owned companies went public. You can read more about what’s driving the trend—and if it's sustainable—by reading Janelle Bradley and Madeline Shi's | | | | | | | |
