There’s an interesting article over at MarketWatch.com. In the article the author, Matthew Lynn, suggests that the era of publicly-held companies may be nearing an end:
The reasons are not hard to figure out. The costs of a listing have risen, and so has the regulatory burden that comes with it. A public company now has to spend a vast amount of time complying with corporate governance rules (and if the European Union has it way will soon have to make sure it has the right number of women on its board as well). A decade-long bear market means that there is far less money available from a listing. The days when every fledging tech business would be valued at couple of billion are long gone. And there is far more capital available elsewhere. It is usually less hassle to sell a stake in a business to a private equity firm than to list it. All three factors make it hardly surprising that so few companies are willing to list their shares.
But the decline of the equity markets raises a question of how much longer they will be an asset worth investing in.
I think he’s overwrought. There are definate benefits to public trading from an investor perspective, specifically liquidity. VC’s financing start-ups long ago understood that at some point you had to access that.
Further, the costs and legality issues of SarBox have already driven those so inclined to privacy. Lastly, the government is doing its best to destroy certain benefits of private equity, like the inane provisions of Dodd-Frank.
Could there be a further re-apportionment? Sure. But the end of public equity finance? This guy must have faced a publishing deadline without an original thought in his head.