By Barry Silbert
The public markets are broken. I have been saying this for years.
The public markets have permanently changed and no longer serve the needs of today’s entrepreneurs. Systemic changes to the way business is done on the public exchanges – the dominance of high-frequency trading and the casino-like environment have made it difficult for entrepreneurs and CEOs to implement and execute long-term strategies.
The markets need to be reinvented.
That’s why at SecondMarket, we’ve created a new model that allows private companies to enjoy the benefits of being a public company (access to capital, shareholder liquidity, communication with their shareholders) with the flexibility of a private company. We enable companies to control their futures so they can focus on long-term growth instead of short-term trading activity, or beating quarterly earnings.
Thus, we’re blurring the lines between public and private to create a new category: a SecondMarket company.
On Monday, First Advantage Bank, a boutique bank in Tennessee, announced its plans to leave NASDAQ to become private and join SecondMarket. In the words of Earl Bradley, First Advantage Bank’s CEO: “We have determined, after several years of public trading, that the public stock markets are not ideal for smaller institutions with lower trading volumes. This allows us to maintain all the characteristics of a community bank and give investors the ability to buy and sell shares. As a private institution, we can better focus on our long-term initiatives and growth in our local markets.”
There is only one way to interpret this news: validation of our model.
While First Advantage Bank is just the first company to leave NASDAQ and join SecondMarket, their decision marks the beginning of a new era for community banks and other companies that are looking to regain control by going private. We don’t expect a deluge of public companies to follow a similar course of action to First Advantage. However, it’s not surprising to us that a public company CEO is echoing the sentiment of most of today’s entrepreneurs: life is better as a private company.
Barry Silbert is the Founder and CEO of SecondMarket.