🌅 IPOs Aren’t What They Used to Be

SOURCE

Badertscher et al. (2025)

WHAT TO KNOW

• Researchers at the University of Notre Dame analyzed nearly 1,000 initial public offerings (IPO) conducted over the past two decades, finding the average age of a company going public has doubled from 4 years in the early 2000s to nearly 10 years today. As a result, the exponential growth traditionally expected after an IPO now happens before the public sale, suggesting the modern public offering functions more like a liquidity event for investors and executives than the beginning of value creation for the public. Put differently, the researchers argue IPOs now reflect insiders’ exit timing rather than public investors’ growth opportunity.

WHY IT MATTERS

• Historically, IPOs helped young, cash-strapped companies raise funds to grow, marking the moment when ordinary investors could share in its success. Two famous examples are Apple (4.5 years old at IPO) and Amazon (3 years), which both went public early in their life cycles. However, the expansion of private capital from venture funds and private equity in recent decades means companies no longer have to rely on public funding to grow. The present study found another driver is low-priced stock options granted to executives that can skyrocket in value after an IPO (called “cheap stock”), which incentivize CEOs to create growth before a public sale and push the offering further down the road.

CONNECT THE DOTS

• In early April 2026, SpaceX made a confidential filing for an IPO later this year, aiming to raise $75 billion at a reported $1.75 trillion valuation (analysts expect the sale to happen sometime in June). If successful, it would be the biggest IPO ever in terms of both funds raised and company valuation.