An important role of public equity markets is to help all investors to connect with companies with companies to develop those companies, hiring new workers and provide the necessary capital for research and development (R&D).
In turn, as these companies grow, they provide returns that create funds for American homes.
Communityly, all these factors feed back into the economy and strengthen it. Creating us an equity market is a source of financial security for American homes, with an contributor to our economic success, the foundation stone of the US financial system.
Today, we highlight some of the major data supporting the NASDAQ proposals to reinforce American public equity markets.
Private market growing at the cost of public markets
Balance between public and private markets has moved considerably since 2000. especially:
- The number of publicly listed companies in the US has declined by about 36%.
- Private equity-supported companies (Green Line) have exceeded 475%.
This shows that there is no shortage of entrepreneurs or ideas in the US – just that less new companies are choosing to be public.
Chart 1: Now there are 2.5x as many PE-supported companies as public companies.
Private companies have been waiting for a long time and growing up
Importantly, these are not just companies that are very small to be public.
There are over 1,400 unicorn companies (with value or above $ 1 billion) priced at a joint $ 5.1 Trillion (Chart below) – a decade ago from $ 330 billion. Despite the growth of companies evaluating more than $ 1 billion, research suggests that only 26% are listed in public. This includes companies that are priced at tens of billions of dollars and even Hundreds Of billions of dollars.
Chart 2: More and more unicorn companies are organized privately
Public markets support domestic money, innovation and economic development
To ensure this, private and public markets work together.
Private markets often provide more flexibility that needs to be done on the scale of early stages and high-development companies, while the public markets provide a well-defined regulatory and liquidity structures that reduce capital costs and increase accountability for comprehensive society.
Nevertheless, there are challenges made by this trend of more private living companies, as we reveal in the new white paper of Nasdaq:
- Domestic financial security: Retail investors remember the opportunity to invest in these companies as public companies. This makes it difficult to secure the retirement of American investors, combining dependence on social security.
- Employment growth: Research suggests that companies conducting an early public offer (IPO) view an average annual employment growth of 23% in the IPO after their first three years, compared to the 7% annual profit for the withdrawal of their IPO filing companies.
- innovation: Funds from IPOS support innovation through an increase in R&D spending, with research that public companies invest about 50% more in R&D than comparable private firms.
- Economic growth: Other research shows that the growing public markets also promote economic growth.
Chart 3: Private Unicorn improved the index of broad public markets
Economics is causing shift
Economics is the reason for this change from public markets. Over time, the rules of the new public company have made publicly more expensive and less attractive.
It is waiting for companies to go publicly, growing 6.9 years ago with an average age at 10.7 years ago.
Chart 4: A company average age in IPO
Meanwhile, other rule changes have made it easier and cheaper to reach private markets. There is also a tendency of more companies choosing to live or return to private ownership.
Data suggests that Global Private Market AUM is more than 200% since 2013. TrillionThe increasing availability of private money has made it possible for these companies to remain private.
Make public markets more attractive again
It is important to address issues contributing to the decline in public markets, with economic development, employment, playing an important role in employment, R&D and domestic funds in public markets.
Nasdaq’s recent white paper highlights many common sense reforms that would help re -create public markets and eventually, American economy.
This includes:
- Reducing regulator burden Scale by scaling the disclosure requirements for the size of the company and simplifying quarterly reporting – or even offering a semi -reporting, as adopted in the UK
- Modernization of proxy voting The procedure to increase the ownership limit for the required level of proposals and the required level of shareholder support to resume the proposals between procedure and other changes by streamlining communication with shareholders.
- Play the playground With smart regulation, keeping the audit relevant and inexpensive, and preventing unproductive litigation.
Restoration of public markets can unlock a strong American economy
These structural changes will help strengthen American public markets and create economics that encourage more companies to go and live in public.
Over time, the American equity market will play an even more important role in supporting economic progress and financial security for all.
