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There are tradeoffs. And the tradeoffs shift over time. Sarbanes-Oxley has (on the margin) made it more costly to be a public company, so we're seeing companie

There are tradeoffs. And the tradeoffs shift over time. Sarbanes-Oxley has (on the margin) made it more costly to be a public company, so we're seeing companies hold out over time. (One can are argue that this strengthened the system - I will leave that argument for elsewhere) There are some absolutes that force a company's hand. 1 - If they have VC money and the investors want an exit, they have to sell it to someone. It's very rare that the current owners will have the money to do this. (If they needed $10mm to grow, will they have $100mm liquid to help someone exit?) If they sell to a PE firm, the problem just gets pushed down the road 5 years. 2 - There are limits to the # of shareholders a private company can have. If you believe in employee ownership, this becomes an issue as private companies grow.

eldavido 12y ago
Re (1), the big story of late is the growing size of private equity funds and companies' ability to raise ever-growing amounts of money without going public. Digital Sky Technologies (DST) did some early investments in facebook that arguably started the trend; Uber just raised two billion+ dollar rounds of funding without an IPO. This was completely unheard-of 20 years ago. [1] Re (2) I don't think you're right, I think it's that there's a cap on the number of shareholders until disclosure becomes mandatory. Can you give a citation for your view? [1] https://gigaom.com/2012/05/08/why-facebook-and-silicon-valley-owe-it-all-to-moscow/ https://gigaom.com/2012/05/08/why-facebook-and-silicon-valle...