The Vanishing IPO Puzzle

The number of private firms going public in the U.S. has declined significantly since 2000. A related phenomenon is that most private firms that “exit” (change ownership structures to allow early equity investors such as entrepreneurs and venture capitalists to cash out) choose to be acquired by another firm. In a new paper, we aim to provide insights into the above trends by empirically analyzing two related research questions using a comprehensive dataset on private firms from the U.S. Census Bureau. First, what explains the tremendous decline in IPOs in the U.S. since 2000? Second, what drives the dramatic shift … Read more