Episode summary
Dylan Jovine | What Killed the IPO Boom (And the Opportunity No One Sees)
Summary
The episode argues that the IPO boom has collapsed over the last 35 years, with the number of publicly traded companies down about 50% since the late 1990s. Dylan Jovine says founders and executives increasingly decide that “the juice ain’t worth the squeeze,” because Sarbanes-Oxley and related litigation make public life too risky and costly, even when the underlying mistake is minor or unproven.
He also argues that the decline in public companies has distorted the public market, pushing valuations higher because investors have fewer places to put money. At the same time, he sees a major opportunity in private markets, especially in companies that may someday go public or get acquired. His preferred targets have experienced management, real sales traction, and anchor investors.
Jovine highlights a private defense software company as an example, saying it already has contracts with the Space Force and the Air Force and fits a broader shift toward software- and AI-driven warfare. He links that shift to faster battlefield execution and says companies helping modernize military operations could be among the most compelling private opportunities today.
Key takeaways
- Dylan Jovine says the number of public companies has dropped by about 50% since the late 1990s, shrinking the IPO pipeline.
- He argues Sarbanes-Oxley and stock-drop litigation have made going public far less attractive for founders and executives.
- He says fewer public names can inflate valuations in the remaining public market because investors have fewer alternatives.
- Jovine prefers private companies with experienced management, real traction, and anchor investors.
- He points to a private defense software company with Space Force and Air Force contracts as an example of the kind of opportunity he likes.
Notable quotes
“since the late 1990s, the number of publicly traded companies has dropped by 50%”
“the juice ain't worth the squeeze. The risks outweigh the rewards”
“There are fewer places to go with your money, so you start to see these outrageous valuations in publicly traded stocks”
“I don't want to hand the keys to the car to somebody who doesn't know how to drive it”
“They already have contracts with the Space Force and the Air Force, and these guys are basically doing software”
How the episode opens
Good morning. This is going to be over behind the markets. Happy Thursday.
Today is Thursday, April 16th, and one thing that has changed a lot since I started working on Wall Street 35 years ago has been the staggering drop in IPOs. Basically, and I have some notes here, since the late 1990s, the number of publicly traded companies has dropped by 50%. There were twice as many publicly traded companies when I started in the business in the early 90s than there are right now.
So, IPOs have really plummeted, and the companies that have it, they've been acquired, and a lot of merging. So, you see a lot of concentration to where now you have 5,000 companies, 6,000 companies that are publicly traded, where in the early 90s there was around 14,000, in the late 90s it was about 12, 13,000. So, we've seen the number of public companies go down by 50%, and there's a couple reasons for this.
One of them is the big one is that founders and executives, basically that I talked to, they're saying, "Look, the juice ain't worth the squeeze. The risks outweigh the rewards. Litigation is a big one, and it really came about with the Sarbanes-Oxley Act after Enron and WorldCom, where they put such onerous regulations on these companies that even if a company makes an honest mistake, they can get sued big time, and it actually becomes and we've seen over the years, even a stock drop, even a price of a stock drops, and you get what we call a stock drop lawsuit, which are these meritless lawsuits that just as these trialers go after, you know, and go after these companies.
They extract these massive settlements just from a stock dropping. It's really unbelievable. So, these companies are kind of facing a double whammy.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ipo boom
- sarbanes-oxley
- ipo lawsuits
- private markets
- defense and ai
Watch the episode
Watch “Dylan Jovine | What Killed the IPO Boom (And the Opportunity No One Sees)” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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