Going public was once a sign of a young startup’s promise. But these days, a growing number of young companies are avoiding IPOs altogether. In 1997, the average age of US-listed firms was a sprightly 12 years old. Now the average age is 20. US public companies have also gotten bigger. Between 1975 and 1991, around half of listed companies had a market capital of less than $100 million (in 2015 dollars)—compared with 22% in 2016.
This all adds up to an astonishing fact: The US now has “abnormally few listed firms,” according to a new working paper (registration required) from the National Bureau of Economics. (The paper hasn’t been peer-reviewed.) In 1997, more than 7,500 American firms were listed publicly in the US. Nearly two decades later, in 2016, the number had dropped more than half, slipping to 3,618 firms.