Run the Numbers The Shrinking Public Markets, and Rise of Private Liquidity Loops
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Jul 12, 2025 Publicly traded companies in the U.S. have halved in the last 30 years, with more firms opting for private ownership. This shift stems from significant changes in the capital markets and a surge in private credit. The move to private equity presents challenges for small-cap companies, while altering the landscape for finance professionals. What does this mean for future employees and investors? The discussion dives into these trends and their implications, painting a vivid picture of a rapidly evolving financial environment.
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Shrinkage of Public Markets
- The number of publicly traded U.S. companies fell from 8,000 in the late '90s to about 4,000 today.
- Public markets have become dominated by larger companies, making it harder for small firms to go public.
Three Capital Market Shifts
- Three structural changes reshaped capital markets: NSMIA (1996), private credit rise, and the JOBS Act (2012).
- These made it easier for companies to stay private longer and raise capital without public listing.
IPO Costs vs. Private Alternatives
- Going public entails costly, complex obligations like Sarbanes-Oxley compliance and quarterly disclosures.
- Many companies now weigh credible private alternatives before pursuing an IPO as a final step.