David, Brody & Dondershine, LLP Experienced General Business Law Attorneys
2100 Reston Parkway, Suite 370
Reston, VA 20191

Publicly traded companies on the decline

A successful business is one that understands its role today and its future growth. Even if a business is similar in nature to its competitors, it has its own business plan and a business model chosen to fit those ambitions. Depending on size and services, popular choices are limited liability companies, partnerships and incorporation.

A key decision for corporations is whether or not to go public. Digital entities like Facebook and Twitter made waves in recent years by offering stocks to the general trading public, and speculation is that Uber and Airbnb will in the future. While public trading offers an air of legitimacy and incentive for investment, the number of publicly traded companies is declining.

1996 to 2016

According to a report by Credit Suisse, the number of publicly traded companies has gone from 7,322 to 3,671 over the past twenty years. It’s nearly a 50 percent reduction, showing a clear trend. Private equity investments reached a record amount last year.

While the amount of decline in publicly traded companies is significant, business insiders aren’t concerned. Instead, they argue that it reflects the individual interests of different businesses. Public trading has benefits, they note, but federal regulation and board member guidelines slow a business’s ability to make fast decisions. Private companies are often more agile.

Every model has challenges

What works for one business may not work for another. Business structure is an important part of raising capital and planning growth, but there are pros and cons with every model, including understanding corporate law. In addition to the models mentioned above, there may be hybrid models that fit best for your needs.

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