Expert insight
Are companies really staying private for longer? No.
March 07, 2025
It has been a longstanding claim that firms are staying private for longer, reducing the number of public companies—and investors’ chances of benefiting from early company growth. But is that true? To find out, we analyzed initial public offering (IPO) and public company data from 2003 to 2024.
IPOs: Steady as they go
Over the last two decades, the average age of a company at the time of IPO hasn’t changed materially, while the number of IPOs per year has generally fluctuated within a consistent range. Although 2020 and 2021 saw a spike in the number of IPOs and a dip in average age, these developments were likely due to uncertainty caused by the pandemic.
Notes: These charts refer to companies completing an IPO between January 1, 2003, and December 23, 2024. The sample is restricted to companies incorporated in the United States and reporting a founding date at or before the time of the IPO. IPOs of companies without a founding date or whose founding date is reported as occurring after the IPO—combined, approximately 1% of all deals—are excluded. The age of a company at the time of IPO is the difference in years between the founding year and the IPO year and is averaged equally over all IPOs.
Sources: Vanguard calculations, using FactSet data.
Investable universe remains steady, but number of microcaps varies
Over the last two decades, the number of companies in the investable part of the public market—including large-, mid-, and small-caps—has remained stable. The number of publicly listed companies is largely influenced by the number of microcap stocks, which range from about $50 million to $300 million in market capitalization. Microcaps are considered less investable because they suffer from illiquidity, resulting in high transaction costs, and are typically only included in total market indexes.
Notes: Large-, mid-, and small-cap stocks are defined as stocks in the Russell 3000 Index that are not also included in the Russell Microcap Index. Microcaps are defined as all stocks included in the Russell Microcap Index. Index inclusion is calculated as of July 31 each year from 2003 to 2024.
Sources: Vanguard calculations, using FactSet data.
Market value of investable securities continues to grow
As the number of investable market public companies has remained constant, their market value has grown. Investors have participated in these gains because equity portions of their portfolios are composed primarily of large-, mid-, and small-cap stocks. The market value of less investable companies has remained a consistently small fraction of the overall market.
Notes: The market value shown in this chart for large-, mid-, and small-cap stocks reflects the market value of stocks in the Russell 3000 Index that are not also included in the Russell Microcap Index. The market value of microcaps reflects the market value of the Russell Microcap Index. Index inclusion and market values are calculated as of July 31 each year from 2003 to 2024. Past performance is not a guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
Sources: Vanguard calculations, using FactSet data.
Acknowledgment: The author would like to thank Steve Lawrence for his substantial contributions to this article.
Related items:
- U.S. equity outperformance (video, issued February 2025)
- Vanguard 2025 private equity market outlook (report, issued January 2025)
- Active and index: Characteristics, not labels (article, issued August 2024)
Notes:
All investing is subject to risk, including the possible loss of the money you invest. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks.
