Most private company owners dream of a liquidity event, but most will never attract the attention of Venture Capital and a subsequent cash-in through an IPO. Usually, they’ll be sold to a competitor, private equity, a family office, or the current management team in a private transaction that creates no publicly held stock.
As it turns out, the private transaction markets are where the action really is and is likely to be for some time according to Dr. Scott Galloway in a recent post in his “No Mercy, No Malice” blog. He writes:
“The traditional IPO construct is in structural decline, and that’s a symptom of a fundamental shift in the capital markets…When capital piles in returns go down, and private market investors want to capture the upside previously leaked to public investors.”
This is a profound shift, and every business owner should have at least a passing acquaintance with it. The good news is that it should redound to the benefit of small to medium size companies when it’s time to sell.
The bad news? It may be harder to find publicly held stock with strong upside in which to invest your sale proceeds. Find out why Dr. Galloway thinks the future of capital is “Private”
