Why Are Fewer Companies Are Going Public? : Understanding the Challenge Facing America’s Public Markets

One of SEC Chair Paul Atkins’ central priorities is strengthening America’s public markets.

His objective is straightforward: make public markets more attractive, encourage more companies to go public, and expand opportunities for investors to participate in the growth of innovative businesses.

It’s a goal that resonates with many investors, policymakers, and market participants. Public markets have historically played a critical role in wealth creation, capital formation, and economic growth.

Yet the decline in IPO activity raises an important question: Why are fewer companies choosing to go public today than in previous decades? The answer may involve far more than regulation alone.

A Market That Has Changed Dramatically

For much of the last century, becoming a public company was often the natural next step for a successful business.

Companies typically reached a point where access to public capital became essential for continued growth. An IPO provided funding, liquidity, visibility, and independence.

Today’s environment is different.

Private companies can access unprecedented amounts of capital through venture funds, growth-equity firms, private-equity investors, family offices, and sovereign wealth funds.

As a result, many businesses can remain private far longer than previous generations of companies.

This doesn’t necessarily mean public markets are less important. It means companies have more choices.

Why Public Markets Still Matter

One of Atkins’ core arguments is that strong public markets benefit ordinary investors.

Historically, many of America’s most successful companies created substantial value after they became publicly traded. Public investors had the opportunity to participate in that growth over many years.

When companies stay private for longer periods—or are acquired before reaching public markets—a larger share of the growth may occur outside the reach of everyday investors.

Viewed through this lens, efforts to encourage more public offerings are not simply about increasing IPO statistics. They are about expanding access to opportunity.

The Growing Appeal of Acquisition Exits

At the same time, acquisitions have become an increasingly attractive path for many entrepreneurs and investors.

A successful company that receives a substantial acquisition offer may gain immediate liquidity, reduced uncertainty, and faster realization of value.

From a board’s perspective, that can be a compelling outcome.

This trend highlights an important reality: companies today are often choosing among multiple attractive options rather than being forced into public markets.

The decline in IPOs may therefore reflect both the success of private capital markets and the attractiveness of strategic acquisitions.

The Reputation Question for Atkins

This debate also has important implications for how Paul Atkins’ leadership will be viewed.

Many corporate leaders, market participants, and advocates of capital-market reform view him as a chairman who is willing to challenge assumptions about regulatory complexity and disclosure burdens. His emphasis on materiality, capital formation, and efficient regulation has become a consistent theme of his public remarks.

Supporters argue that reducing unnecessary friction in the IPO process could make public markets more competitive and attractive for growing companies.

Others emphasize the importance of preserving robust investor protections and maintaining confidence in U.S. markets.

Importantly, Atkins has generally framed these goals as complementary rather than conflicting. His position is that strong investor protection, efficient markets, and capital formation should reinforce one another rather than compete with one another. The challenge is finding the right balance.

The Real Policy Challenge

The challenge for policymakers is not simply making IPOs easier.

It is ensuring that public markets remain competitive and attractive in a world where companies have more alternatives than ever before.

That includes examining:

• Regulatory requirements

• Disclosure obligations

• Access to capital

• Investor protections

• The economics of private-market funding

• The incentives behind acquisitions

Each of these factors may influence whether a company ultimately decides to go public.

When Does Going Public Make Sense?

There is no universal valuation threshold that automatically makes an IPO the right decision.

Instead, executives and investors typically compare three options:

1. Stay private

2. Sell the company

3. Go public

The decision often comes down to one question:

Can we create more value as a public company than we can through private financing or an acquisition?

If the answer is no, an IPO becomes difficult to justify. Consider two scenarios.

Option 1: Sell the Company

• Acquisition offer: $4 billion

• Immediate liquidity

• Lower risk

• No public-company obligations

Option 2: Go Public

• Expected IPO valuation: $4–5 billion

• Ongoing reporting requirements

• Market volatility

• Shareholder scrutiny

• Continued execution risk

Many boards would choose the acquisition. The calculation changes only when public markets offer significantly greater upside.

For example, if acquisition offers are around $8 billion but management believes the public market could support a $15 billion valuation, an IPO becomes much more attractive.

In other words, the decision is often driven by economics rather than regulation.

The Hidden Impact on Individual Investors

The IPO debate is not just about companies. It is also about investors.

In previous generations, investors could participate relatively early in the growth of companies such as Microsoft, Amazon, Home Depot, Starbucks, and Cisco.

Much of the wealth creation occurred after those businesses became public.

Today, many companies remain private longer. Some raise multiple rounds of private funding. Others are acquired before ever reaching public markets.

When this happens, much of the growth benefits founders, venture capital firms, private-equity investors, and institutional investors. Ordinary investors may get access much later—or not at all.

This is why the decline in IPOs matters. The issue is not simply the number of companies going public. The issue is whether ordinary investors are losing access to the most valuable phase of company growth.

The Question Worth Exploring

Perhaps the most interesting question is not whether regulation matters. It clearly does.

Rather, the question is:

What combination of factors will make public markets the preferred choice for the next generation of great companies?

That question recognizes a reality often missed in discussions about IPOs. The issue is not whether companies can go public. Most successful companies can.

The issue is whether public ownership remains the most attractive option when compared with private funding and acquisition opportunities.

Looking Ahead

The future of American public markets will likely be shaped by a combination of regulatory reform, technological innovation, investor demand, private capital availability, and corporate strategy.

Atkins’ efforts are best viewed within that broader context. His focus on revitalizing public markets addresses an important concern: ensuring that ordinary investors continue to have meaningful access to the growth of America’s most successful companies.

Whether that goal is achieved will depend not only on SEC policy, but also on how companies, founders, investors, and markets evolve in the years ahead. Ultimately, the most important question may be:

How can America ensure that the next generation of great companies creates opportunities for both private investors and the broader investing public?