Whatever happened to the plc?

Since the mid-1800s, at least in Anglophone countries, the plc-stock market double act has been the busy flywheel of material advance; the former channelling entrepreneurial exuberance and technological knowhow into commercial opportunity, the latter risk capital and subsequent returns to investors.

But now the motor has quietly gone into reverse. The main corporate use of stock exchanges is no longer raising capital but retiring it. When companies do IPOs, it is often to provide an exit for founders and venture capitalists rather than to raise money for productive purposes. 'It's a strange situation,' reflects London Business School professor Julian Birkinshaw. 'The capital markets are being used for buyouts, M&A and share buybacks, but companies aren't going to shareholders to borrow to grow. It's a story of consolidation, not growth. It's as if the virtues of the system aren't required any more.'

To read the full article in Management Today, click here

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