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The decline in the number of public companies—down nearly 40–43% since the 1990s—reflects structural deterrents for smaller growth firms, including the rising cost of compliance (Sarbanes-Oxley, Dodd-Frank), regulatory complexity, and increasing preference for staying private until later stages [n]([bluetrust.com](https://www.bluetrust.com/blogs/why-has-the-number-of-public-companies-declined/?utmsource=openai)). With fewer small/mid-caps accessing public markets, the equity pool is increasingly dominated by large-cap names, reducing liquidity and limiting retail investor participation.
The SEC’s 2024 rules for SPACs and de-SPACs significantly raise the bar for these alternative listing vehicles. Key additions—co-registration of target companies, robust disclosure on dilution, sponsor compensation, and forward-looking projections—are designed to align SPACs with IPOs in investor protections. These rules, effective July 1, 2024 (with some tags required from June 2025), impose meaningful requirements on entities seeking to go public via SPACs [n]([skadden.com](https://www.skadden.com/insights/publications/2024/01/sec-adopts-final-rules-affecting-spacs-and-despacs?utmsource=openai)). This raises both compliance costs and strategic complexity for companies considering SPAC routes, particularly early stage ones.
Despite macroeconomic headwinds—rising interest rates, inflation, geopolitical uncertainty—the IPO market has seen a meaningful rebound in 2025. In Q3, traditional IPOs reached their best value figures since 2021 with ~$16.5 billion raised, and YTD IPO numbers have already surpassed those for full-year 2024 [n]([ropesgray.com](https://www.ropesgray.com/en/insights/alerts/2025/10/capital-markets-governance-insights-october-2025?utmsource=openai)). Equity issuance as a whole also remains strong, with combined IPO, follow-on, and convertible deals in 1H 2025 totaling ~$135.5 billion across nearly 500 deals, up ~7% over the same period last year [n]([spglobal.com](https://www.spglobal.com/market-intelligence/en/news-insights/research/2025/07/2025-us-new-issuance-half-year-recap?utmsource=openai)). These facts suggest investor appetite remains, especially for later-stage, credible stories, though pressures remain on valuation, disclosure, and timing.
Strategic implications for emerging growth companies and boards include: maintaining Form S-3 eligibility and sufficient public float, preparing robust governance and financial reporting systems in advance, choosing financing instruments that balance speed, dilution, and perception (i.e., PIPEs, RDOs, CMPOs vs SPACs), and monitoring regulatory developments (e.g. listing standards) closely. Additionally, debates over reintroducing lighter disclosure regimes for small/mid-caps and potential reforms in listing thresholds emerge in current policy discussions [n]([reuters.com](https://www.reuters.com/legal/government/us-exchanges-sec-talks-ease-public-company-regulations-2025-06-25/?utmsource=openai)).
Open questions that require further data include: how effectively smaller companies can access capital via alternatives without undermining investor confidence; whether regulatory easing will lead to a surge in IPOs or simply shift structures; and how macroeconomic risks (rates, trade policy, investor risk tolerance) will shape valuation multiples and exit windows going forward.