By Emeritus Professor Stéphane Garelli
The tribulations of Blackberry, Yahoo or Twitter remind us that companies can and do disappear. The large companies of today are not the same as the ones of yesterday. The process of creative destruction highlighted by Schumpeter is still in action. Indeed, it is accelerating.
A recent study by McKinsey found that the average life-span of companies listed in Standard & Poor’s 500 was 61 years in 1958. Today, it is less than 18 years. McKinsey believes that, in 2027, 75% of the companies currently quoted on the S&P 500 will have disappeared. They will be bought- out, merged, or will go bankrupt like Enron and Lehman Brothers. Some companies manage to escape this mass destruction. General Electric, Exxon Mobile, Procter & Gamble and DuPont are among the oldest companies on the New York Stock Exchange. Nevertheless, the largest market capitalizations today have new names: Apple, Alphabet, Microsoft or Amazon.
