I love making sweeping predictions on this blog, and today’s post is no exception. In-fact, this might be one of my themes to watch in 2025. Let me explain…
After reading about a particular deal involving Nordstrom’s (the retail giant), I’m convinced of something I’ve long argued: small and mid-cap companies (there are over 2,000 of them) have gone absolutely nowhere while the same 10-20 stocks—think NVIDIA, Apple, and their mega-cap friends—maintain all the attention.
Nordstrom’s decision to go private solves this reoccurring problem: all the capital flows to the same 10-20 companies and every other company has gone nowhere, burning money on regulatory costs. One statement from Nordstrom’s really stood out: The Nordstrom family believes it will be more successful without the scrutiny and demands of the public market.
This is the question every executive at these kinds of companies needs to start asking: why pay legal fees, filing costs, exchange fees, investor relations teams, and everything else required to stay public—for this kind of performance (see chart below)?
And so, I believe this is a brilliant move by Nordstrom—and one that other small to mid-cap companies should seriously consider. Now, I’ll go into the details on why these kinds of deals could accelerate into 2025:
1. The Public Market Only Consists of 10 Stocks
The same 10 or so stocks dominate investor attention and capital, day after day, year after year. For smaller companies, being public often means being overlooked, undervalued, or perpetually floundering. Why stay in that race? Last year, the top 10 companies (out of 2,000+) represented 50% (!!!) of all trading volume.
2. The Overhead Isn’t Worth It
Quarterly earnings calls, detailed legal filings, exchange fees, and the regulatory burden are all incredibly expensive. If you’re not reaping the benefits of public notoriety or constant capital flows, why pay the price? Save that money and reinvest in your business or yourself.
3. Massive Savings and Freedom
By going private, companies can strip out public market costs and reinvest those savings into growth, innovation, or simply boosting their bottom line. This can be a game-changer for many mid-tier businesses. It also maintain company focus without having to follow the stock price daily.
4. Public Stock Picking is Fading
With endless liquidity and algorithmic trading, there’s always someone to fill an order—but excitement has drained from the broader market. Beyond the mega-cap favorites, the rest of the market feels stagnant. Why compete in a system designed for the giants? More importantly, why buy stocks when your money is going right to market makers who manage essentially all of the order flow. There is simply no more peer-to-peer trading in public markets.
5. Crypto Markets Will Soon Eat This Industry
For smaller and mid-sized companies, crypto markets offer an alternative path—lower barriers to entry, a global investor base, and less regulatory costs associated with traditional markets. As these markets mature, they’ll likely attract more companies looking for flexibility and visibility. A company can launch its own token in a matter of months without any of the paperwork bureaucracy needed in public markets.
My Final Thoughts: Here Comes Sweeping Change
Nordstrom’s move is smart. It sidesteps a system that no longer serves most small and mid-caps, allowing the company to focus on profitability and long-term strategy. Others should take note: going private might just be the smartest decision they ever make rather than floundering and burning money on a market that simply will not return anything. Actually, it probably does more harm than good as you are essentially now just a pawn to market makers and “middle men” of markets.
As the public market grows more concentrated, becomes more exhaustive, requires higher costs, and regulatory frameworks weigh on small companies, the advantages of private ownership are becoming harder to ignore. Actually, most small to mid cap companies should do this.