There has been a dearth of IPOs in recent years.
This has led to widespread complaints among public-market investors that there's nothing exciting to invest in anymore.

It has also led to a much broader development of the private markets for hot emerging technology companies.

As a result, investors who can invest via these private markets have cashed in, while public-market investors have missed out.

Meanwhile, the companies that do go public are already so big and highly valued that there's often not much upside left.

So, why is it that companies don't go public anymore?

Well, for one thing, there's the cost. Thanks to the massive regulatory burden the country now places on public companies, it costs at least $5 million a year to be public. What small company in its right mind would want to pay that?

Then, for another thing, there's the enormous hassle and legal risk.

Case in point: Groupon.

Groupon went public at the end of last year. The company is only three years old. It's expanding into many new business lines, so it's still learning as it goes. One of the things Groupon just learned is that the new high-ticket items it is selling have a higher return rate than the lower-ticket items. This realization forced Groupon to restate its Q4 earnings just a few months after going public.

Is that embarrassing?

Yes.

Is it FRAUD?

Unlikely. More likely, Groupon just wasn't conservative enough in its assumptions. Presumably, it has now learned a searing lesson.

But now look at what Groupon has to deal with:

That's just a small sample--there will be many more.

All of these defenders of the stupid innocent will search the land to find some mom and pop investors--people who never, ever should have bought a stock as risky as Groupon--and use them to shake down Groupon for some settlement money.

And Groupon will pay the settlement money, just to make these folks go away.

The lawyers will take most of the settlement. The mom and pop investors will probably get about $2.98 apiece.

Importantly, Groupon looked like a lousy investment when it went public. That's what I shouted from the rooftops. That's what Jim Cramer shouted from the rooftops. That's what a boatload of other people shouted from the rooftops.

But what made Groupon lousy was not the fact that it has had to make a minor earnings restatement. It was that investors were just paying way too much for the stock of a company that was still experiencing major growing pains.

Investors who choose to do that, voluntarily, despite all the warnings, should take some responsibility for their decisions.

But they won't.

Because this is America. The United States Of Litigation. The country where if you do something stupid it's always someone else's fault.

And that means that, if there is any conceivable way for "the public" to invest in your company, you're eventually going to get your ass sued off--whether or not the investment was suitable or smart for the people who bought it.

So, faced with that reality, why WOULD any company want to go public?

Why not just stay private? Reduce your litigation risk. Keep your costs down. Deal only with investors who understand that investing is a voluntary and risky activity and that sometimes, god forbid, you actually lose money.

This post originally appeared at Business Insider.

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