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The Bad Side of a Good Idea
Report

The Bad Side of a Good Idea

Why fewer companies are going public, why it’s a problem, and what we can do about it.

Morgan Housel
Collaborative Fund, 2016
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Editorial Rating

8

Qualities

  • Innovative
  • Well Structured

Recommendation

For more and more companies, the road to future expansion does not include an initial public offering. According to this insightful article from journalist and private equity investor Morgan Housel, the short-term pressures of reporting to shareholders are driving CEOs to seek financing alternatives. And as the number of publicly traded stocks shrinks, investors must look to getting greater returns from fewer companies. getAbstract recommends this thought-provoking report to investors and to executives considering initial public offerings or private equity funding.

Take-Aways

  • The period between 1996 and 2016 saw a steep drop-off in the number of US publicly traded companies, from 7,322 to about 3,700.
  • Starting after 1990, dizzying growth in the financial markets fueled a radical change in investors’ goals: from a long-term perspective to a short-term focus.
  • In many cases, the fear of losing control by missing investor demands for short-term results has dissuaded CEOs from tapping the public markets.

About the Author

Morgan Housel is a financial journalist, a private equity investor and a partner at the Collaborative Fund, a leading capital source for entrepreneurs.

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