The U.S. initial public offering market was a very different place back in 2021 when Clearwater Analytics CFO Jim Cox helped take his financial services software company public. 

In September of that year the Boise, Idaho-based firm, after a strong debut, was valued at over $5 billion, marking it as one of a series of successful tech unicorn launches of the time, Reuters reported. 

“It was a very different time, a very robust and, frankly, frothy market,” Cox recalled in an interview, noting the pendulum’s swing cut the other way in 2022. “Obviously, with the changes in the interest rate environment and the Fed’s action and some of the uncertainty in the economy, the IPO window closed.”

While the broader IPO market pace is still dialed back, there are some green shoots: in the first half of 2023 proceeds from companies going public rose 87% albeit it was over an anemic performance the year earlier period, with nearly half of the proceeds coming from the $4.4 billion IPO in May by Kenvue, a divestment by Johnson & Johnson of its consumer health care business, CFO Dive previously reported. 

While Cox acknowledges it’s still early days in what could be a new cycle, he believes now is a good time for CFOs and their companies to consider both whether they want to go public and, if so, how they’ll go about doing it.

But given the IPO market’s currently murky outlook and a possible recession still looming, how can executives cautiously dip their toes into the IPO waters without showing all their cards? Here are a few gauges that finance executives can use to get a feel for the market and their prospects, according to Cox:

1. Look for marquee names: One sign that a truly robust IPO market has arrived is a big name deal that prices well, Cox said. In 2021 the list of biggest companies going public was topped by the $11.9 billion deal size of electric automaker Rivian, according to a Morningstar report. In 2022 AIG spinout Corebridge topped the list with just $1.7 billion in proceeds, according to a SeekingAlpha report. For now, the tech sector side remains quiet but Cox is watching to see if new activity will be generated by buzzy AI-focused companies.  
2. Watch for LinkedIn hints of comeback’s timing: The activity on the social media site is a good gauge of forward-looking IPO trends, according to Cox. For example, in 2022 he said recruiters weren’t pinging CFOs looking for executives to take companies public. This year, there are plenty of such recruiter requests coming in but the lead time is fairly lengthy. “They’re not saying they’re looking to go public in the next six months. They’re looking to go public in the next 18 months,” Cox said. 
3. Host a bake-off: This is a step further down the path toward IPO but it’s another opportunity for companies to privately collect data. Despite its name, it does not include cookies or cake but rather refers to companies asking the investment banks to come in and pitch to be an underwriter in the upcoming public offering, Cox said. “Those folks will give you that point of view, and tell you the profile of businesses that investors are interested in,” Cox said. “You want to listen.” 
4. Early private (and sometimes friendly) meetings: IPOs conjure up visions of sleep-deprived executives rife with Wolf of Wall Street-level anxiety selling a private company’s story to skeptical investors. But the reality is that the serious work and meetings that sharpen a company’s presentations and hone in on key metrics start much earlier. Before its road show, Cox said that Clearwater Analytics early on got feedback in private meetings with about 20 investors, some of whom he’d previously worked and was friendly with. 
5. Confidential IPO filings: Companies can opt to privately file a confidential draft IPO registration with the Securities and Exchange Commission for review. This allows companies to privately get feedback on their plans, Cox said, enabling companies to “test the waters.” The SEC will look at your documents and say ‘this is wrong, this is right, please answer these questions,’” Cox said. Thereafter the filing is “flipped” and becomes public, Cox said. “Once you’re public you have to go, go go.”