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New Goldman Sachs research suggests companies are better off skipping IPOs and staying private — a rare development that's preceded both the financial crisis and tech bubble
  • In a sweeping new report on the state of venture capital, Goldman Sachs analysts revealed new findings about the performance of private and public markets.
  • The firm found that — over the last two years — the biggest newly public companies would've created more value for themselves by staying private, because the actual value they've earned in the public market has significantly lagged.
  • In other words, it may have paid to stay private between 2017 and 2018.
  • This dynamic is historically unusual, underscoring both a broader trend in companies staying private longer, and the importance of monitoring how this year's IPO slate performs.
  • Indeed, this shift has only appeared twice in the past 25 years, both at harrowing times for US markets — once before the dotcom-bubble burst, and once before the financial crisis, the analysts said.

"While attempting to quantify performance in the private markets is extremely difficult and subject to significant survivorship bias, in our analysis, we looked at returns of the top 25 IPOs annually by gross proceeds, as well as our companies under Internet coverage, from 1995 to 2018 (refer to our methodology section for additional details) to understand how the value created as public companies, in the form of market cap, compared to relative to the value created as the private companies. We utilize the market value of each company at the first market close post-IPO to benchmark."
  • Everyone thinks the market's hottest tech stocks are too expensive — but new research suggests one segment is offering a major bargain right now
  • Citi's innovation chief says that employees ask her to kill their tech projects, and it helps the whole company move faster
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Full "The Business Insider: The Money Game" article




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