Under the headline "The Profits of Going Public Without the 'Brain Damage,'" Andrew Ross Sorkin has a column about tech companies staying private rather than going public:
The number of companies listed on public stock exchanges is half what it was two decades ago. Last year, fewer companies went public than during the financial crisis.
It's an interesting column but there are a few areas that I wish had been explored more. First, maybe some of these companies remain private not entirely by choice but because they can't successfully find enough public shareholders to buy in to marginally profitable or unprofitable companies at stratospheric valuations. In other words, if they could go public, they would, but they can't, so they are portraying it as choosing to stay private longer.
Second, there's a whole range of right-leaning policy critiques — the red tape and compliance costs of Sarbanes-Oxley, the ridiculousness of SEC-mandated "quiet periods," the vulnerability to lawyers who specialize in suing companies and executives when share prices decline, the vagueness of insider trading rules and the severity and capriciousness with which they are enforced — that may help explain why some companies do prefer to avoid public offerings.
