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The Tipping Point
We recently encountered a chart compiled by Global Securities Information that quantifies how attractive being a public company in the US is today.
For 2005 the number of public companies going private was estimated at 107 while the number of IPOís was 108. In other words, last year the US stock market grew by a net of one listed company, not counting what must be hundreds that exited through mergers and delistings.
This state of affairs contrasts sharply with the pattern that held from 2000 to 2004: in 2000, the public marketís IPO inbound versus its going private outbound generated a net increase of 415. For 2001 through 2004, that increase was 156, 148, 60 and 200 respectively. Again, last yearís was one.
Tipping points are only obvious in retrospect. But if thatís what 2005 proves to be, we suspect the dead regulatory weight of Sarbanes Oxley and its associated personal liabilities will prove to be a major explanatory factor.
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