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Where Have All The Public Companies Gone?

  • Robert Lowenthal
  • November 30, 2018
business people in a business office

In December 1996, there over 8,000 publicly listed companies; in 2017, today there less than 4,000.The sharp decline in the number of publicly listed companies is something that has been gradually happening for decades and represents a fundamental shift in how companies raise capital and grow their businesses. Most of us can recall the days when an initial public offering (IPO) was considering the holy grail of every emerging growth company. It served as an important marketing event in the life of a company and usually followed a successive issuance of equity and debit to finance growth.

Needless to stay, the decline in public listings has not meant that companies are no longer growing at the rate they once were. Quite the contrary: the size of today’s public companies has significantly increased to an average market capitalization of $7.3 billion vs. $1.8 billion in 1996.  Even more shocking: 50% of the total U.S. market cap is concentrated in 140 companies.1 It is worth mentioning that this is a trend unique to the U.S. Other developed countries with similar institutions and economic developments have seen public listings increased by 48% since 1996.2  

So why are fewer U.S. companies going public? There are a number of factors why this might be. One significant driver is acquisition and consolidation. Over the last decades, we’ve seen a sharp rise in mergers & acquisitions, leading to an abundance of conglomerates.

However, there are systemic reasons why public markets are no longer as attractive to today’s growing companies:

Thanks to increased regulatory and filing requirements stemming from the Sarbanes-Oxley Act of 2002, the cost of filing an IPO and paying annual listing fees has skyrocketed. A PwC survey of CFOs estimated one-time costs associated with an IPO to be in excessive of $1 million and annual costs between $1-1.9 million.3

Public companies are valued on discounted cash flows; if you are growing fast but losing money, there is a risk of being devalued. At the same time, public companies are under constant scrutiny: any unfavorable news or underwhelming quarterly earnings reports can send the stock price tumbling. This is particularly disconcerting to many of today’s companies that are focused more on IP-driven business models, versus constantly investing in new technology and equipment. All of this has led many companies to rethink whether they are ready for the burden of being a public company.

But perhaps the most significant factor in declining interest in the public markets has been the rise of the private markets. This was facilitated in part by the passage of the JOBS Act of 2012, a landmark legislation that increased the number of allowable shareholders for a private company from 500 to 2,000. This essentially prevented companies from being forced to go public once they reached a certain size. Additionally, new security offering exemptions introduced by NSMIA streamlined the sale of private company stock to “qualified purchasers” – large institutions and wealthy individuals.  Both of these factors led to the creation of a new private capital market that has been growing exponentially since 2013.

Oppenheimer Private Market Opportunities

Through the creation of our Private Market Opportunities (PMO) platform, our vision is to broaden access to investment opportunities in private companies. PMO is a collaborative effort across the firm’s key business units including our Investment Banking, Equity Research, Asset Management, and Private Client divisions. Working together, our teams source and vet potential investments and deliver them to our clients through their Financial Advisors.

Since launching our first PMO a year ago, we have closed over $45 million in investments from Oppenheimer clients. These investments have been deployed across innovative technology companies through a mix of primary and secondary funding. Our platform has helped establish transparency between investors and company management – removing the concern around identifying and enlisting only qualified purchasers.

One thing is certain: despite the seemingly glacial pace of governments and regulating bodies, public and private capital formation is changing at an alarming rate. At Oppenheimer, we remain focused on carefully observing those changes and providing our clients with comprehensive access to both public and private investment opportunities.

Rob Lowenthal

Robert Lowenthal


Head of Investment Banking

Article Disclosures & Sources


1 E&Y ‘Looking Behind the Declining Number of Public Companies’

2 The U.S. Listing Gap, 123 Journal of Financial Economics (March 2017).

3 PwC  ‘Considering an IPO to Fuel Your Company’s Future?’

4 SEC Report to Congress: Access to Capital and Market Liquidity (August 2017).

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