The Deregulation of the Private Equity Markets and the Decline in IPOs
62 Pages Posted: 15 Aug 2017 Last revised: 8 Feb 2019
Date Written: December 26, 2018
The deregulation of securities laws in the 1990s—and in particular the National Securities Markets Improvement Act of 1996—has facilitated the process of raising capital privately and been a key driver of the decline in U.S. IPOs. Privately-held startups are now able to grow to a size historically available only to their public peers. The IPO decline is not a market failure in the process of going public. Rather, it is the result of founders taking advantage of their increased bargaining power and lower cost of being private to realize their preference for control by choosing to remain private.
Keywords: Initial Public Offerings (IPOs), Venture Capital, Private Equity, Founder Equity, NSMIA
JEL Classification: G32, G24, G28
Suggested Citation: Suggested Citation