Average Tenure of Companies in the S&P 500 Index: 15 Years

The average number of years a company remains in the S&P 500 index keeps declining.

Several factors are driving the faster churn in the index:

1. Creative destruction operates more rapidly, shortening the typical time a company remains large and competitive enough to stay in the S&P 500.

2. Technological innovation (IT, internet, AI, cloud, mobile) creates new business models that scale quickly and displace incumbents before they can adapt.

3. M&A and private equity activity more regularly remove large firms from public markets via buyouts or mergers.

The bottom line is that companies in the S&P 500 stay successful for shorter and shorter periods.

Average tenure of companies in the S&P 500 index keeps declining
Sources: Creative Destruction Whips Through Corporate America, Corporate Longevity: Turbulence Ahead for Large Organizations – Executive Briefing, 2021 Corporate Longevity Forecast | Innosight, Apollo Chief Economist

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