Why are there so few public companies in 2020 vs 1990

# of companies that are publicly held <via Morgan Stanley report 2020>

U.S. domestic equity mutual funds manage about $8.4 trillion, with active funds controlling $5.6 trillion and index funds $2.8 trillion at year-end 2019.

Overall US domestic market

Buyout funds in the U.S. have $1.4 trillion in assets under management (AUM), including $560 billion in “dry powder.”

Venture capital funds have AUM of approximately $455 billion, which includes dry powder of $120 billion.

The equity capitalization of the U.S stock market is roughly 27 times the size of AUM for buyout funds and more than 80 times the size of venture capital funds.

There are about 3,600 public companies in the U.S. today, about one-half as many as there were in 1996 and three-quarters as many as there were in 1976. The drop reflects active M&A activity and a low level of initial public offerings (IPOs). More than 90 percent of the stocks that have disappeared since 1996 were those of small- and micro-capitalization companies.

Market capitalization of public companies


  1. Less need for money – fewer capital investments. As a consequence, companies need less capital to fund their operations and hence the demand to raise capital through public markets has diminished.
  2. Sophisticated investors, including pension funds and endowments, have moved their asset allocation toward private markets in search of higher returns.
Sophisticated investors have moved money to alternative assets
  1. Companies have raised more money in private markets than in public markets in each year since 2009. For example, companies raised $3.0 trillion in private markets and $1.5 trillion in public markets in 2017.
  2. Regulation and legislation have also played an important role in the evolution of capital markets. A company’s propensity to go public can be framed as a cost-benefit analysis, and the costs have risen since the 1990s.
  3. Finally, the tendency of executives to mindlessly imitate the behavior of their peers, no matter how foolish it may be to do so.”
Returns in alternative asset classes have been better

As of year-end 2019, there were approximately 3,640 listed companies in the U.S. employing 42 million people, roughly 7,200 firms owned by private equity buyout funds employing 5.4 million, and 18,400 companies backed by venture capital firms employing 1.1 million. The average market capitalization for a public company today is roughly $10.4 billion, up from about $700 million in 1976, adjusted for inflation.

Investors have been taking money out of public equities in the U.S., with net outflows of about $500 billion from domestic equity mutual funds and ETFs over the past 5 years.

Investor commitments to U.S. buyout funds have increased steadily in recent years and in 2019 surpassed the peak preceding the financial crisis. Commitments to venture capital funds are also near record levels excluding the extraordinary inflow in 2000, which remains almost twice as large as any other year. Combined, the commitments to U.S. buyout and venture funds were about $315 billion in 2019.

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