Here’s what you should know about the IPO process

Despite the rush of IPO headlines as of late, the process has actually grown less common.

Between 2000 and 2018, an average of 110 companies went public each year, compared with more than 300 a year between 1980 and 2000. “It’s a dramatically lower number, even though the economy is much bigger than it was 30 years ago,” Ritter said.

That’s mainly because companies increasingly have other ways than the public market to raise money. “There’s been an explosion in the private capital available to companies,” Rodgers said.

And some companies are going public without an IPO — but through a process called a direct listing, in which shares are offered directly to public investors without the underwriting of a Wall Street bank.

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Rodgers, who worked on the recent direct listing of music-streaming service Spotify, said the option makes sense for companies that already have a robust shareholder base and no need for immediate capital. “It’s essentially leaping into life as a public company without doing an offering,” he said.

Many executives are also not eager for the scrutiny — including swarms of analysts, government regulation and constant coverage in news media — that comes with becoming a public company, Rodgers said.

“Your life going forward is lived under a microscope,” he said.

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