- BlackRock Chairman and CEO Larry Fink recently went on CNBC and discussed why private companies should go public sooner. This is why.
BlackRock Chairman and CEO Larry Fink recently went on CNBC’s “Squawk Box” to discuss the company’s quarterly earnings along with China trade, the Fed, corporate purpose, recession risks, and other details.
In the interview with CNBC’s Joe Kernen, Becky Quick, and Andrew Ross Sorkin, one of the most important points Fink made was that companies should be going public sooner.
Fink pointed out that too much funding was being used for private growth valuations. And this is leading to massive valuations prior to entering public markets following IPOs. Uber is one of the biggest examples of this problem. Fortunately, WeWork postponed its IPO to potentially prevent this problem from happening.
“This is why I believe in the public markets. With the public markets, it’s harder to hide. Reality is shown every 3 months. And this is why having that public exposure and transparency is the best outcome for all companies to continuously evolve,” said Fink.
Sorkin pointed out that some of BlackRock’s clients are able to invest in private companies at the higher valuations through some of its funds. And then Sorkin asked about how some of the public market investors should think about that.
“It’s a wake-up call for these private valuations. I mean there was certainly way too much money flooding into the private growth valuations. And I think it’s being reset.” responded Fink.
Fink also pointed out that a lot of these companies have a mantra about “growth at all costs.” That often leads to bad outcomes. And so investors will have to rethink about their approach and need to be more thoughtful about when companies can make profits and whether they are real or can only be sustained with private capital.
Here is the CNBC video of the interview featuring Fink:
