Bloomberg Businessweek

F I N A N C E

3

20

Edited by

Pat Regnier

Aging implies durability. “That’s the key here:

Older firms, larger firms, have a better track

record because you became large,” says René

Stulz, the Everett D. Reese Chair of Banking and

Monetary Economics at Ohio State University.

“You have more of a cushion against the impact

of bad news. You might be diversified, you might

be operating across different countries, differ-

ent parts of the country. All of that merely tends

toward having less volatility.”

The trend toward fewer and older companies has

been developing for years. Companies are staying

private for longer, and initial public offerings—once

a rite of passage for a successful startup—get done

later. Once companies do list, they quickly become

prey. In a market dominated by megacaps, behe-

moths swallow up competitors with ease. “What’s

happened in the last 20 years? It’s been essentially a

dearth of IPOs and a continued drumbeat of mergers

and acquisitions,” says Michael Mauboussin, director

of research at BlueMountain Capital Management.

A continuing mystery for stock investors has

been the almost unprecedented calm that’s ILLUSTRATION BY WOSHIBAI

Certain adjectives come to mind in describing the

U.S. stock market. Sprawling. Resilient. Diverse.

Here’s another you probably haven’t thought of:

old. Thanks to an absence of new entrants, the

average age of companies listed on U.S. exchanges

has been steadily rising for three decades. Now it’s

20 years, almost twice the average in 1997 during

the dot-com craze.

The market won’t be getting much younger this

year. Six unicorn tech giants, including ride-sharing

network Uber Technologies Inc. and online home-

rental service Airbnb Inc., are preparing to go pub-

lic at an average age that’s four years older than

what was typical two decades ago.

What happens when a population ages? Opinions

abound in the stock market. Some say investors miss

out. Fund managers find it harder to build portfolios

that truly reflect what’s happening in the economy

as new companies stay private. Another theory com-

pares stocks to people and says both slow down and

eschew risk. And while that notion seemed crazy

amid December’s equity earthquake, a case can be

made that a mature market is less volatile.

As startups delay going public and mature companies

diversify, is the market mellowing?

Even the IPOs Are

Old Now