It takes your company off the stock exchange so there’s no longer a live ticker on its worth. Useful to get through tricky times without a bunch of public scrutiny. It also typically comes with centralising the share ownership, and more consolidated stakeholders can allow for more direct control without “public” oversight or accountability
Money. A company goes public when they either need financing or more recently, when the stakeholders want to be paid thru an IPO. Being public means you have to share your profits with shareholders. In a private company, the owners can keep all the profits.
It’s expensive to be public. You have to make all sorts of public disclosures and, even if you do it all right, somebody can still sue you claiming that you misled investors.
Public companies can make a lot of money if they are perceived to be likely to grow. But the inverse is that if you aren’t growing, then money is flowing OUT. The money loss can be so severe that public companies often can’t afford to EVER lose money, not even in the short term – they struggle to put money into something that will take years to pay off because it shows them losing money, so people sell stock, which loses even more money, so people sell more stock, and so on.
Public companies are also have to publicly put info out about their business – how much they made, how much their executives make, what their plans are for the short and long-term.
Private companies don’t have to tell the public anything. They can work on something quietly to surprise their industry with a disruptive offering, which can be a competitive advantage. Their compensation packages are private, so it’s more difficult to woo away executives with competing packages without knowing what they’re currently getting
A public company cannot just choose to go private. A sufficiently large group of its owners may choose to take the company private (which involves buying out the shares from anyone who doesn’t stay in that ownership group).
The reason they would do that is largely the same reason anything might be taken from public to private – they want more personal and direct control over it.
A private company can make drastic changes to the business models without being pummeled by Wall Street. Sometimes, companies want to evolve to a different payment model like SaaS, but that drastically affects the numbers that are reported to Wall Street. This triggers unwarranted selling and can be very disruptive to business. Going private makes it a non-issue to do things like this.
No longer have to keep shooting to meet Wall St. quarterly estimates so companies can plan longer term strategically vs. focusing on next 3 months so much. Can focus on product, customers, employees instead of just shareholder value.
Comments
Less scrutiny from the world in general. No need of quarterly rectal exam.
[deleted]
It takes your company off the stock exchange so there’s no longer a live ticker on its worth. Useful to get through tricky times without a bunch of public scrutiny. It also typically comes with centralising the share ownership, and more consolidated stakeholders can allow for more direct control without “public” oversight or accountability
Public companies have all kinds of reporting and transparency requirements. And scrutiny/pressure around how they spend money, profitability etc.
Going private again lets you close the door on financials and be a bit more aggressive or risky with investment, restructuring etc.
Money. A company goes public when they either need financing or more recently, when the stakeholders want to be paid thru an IPO. Being public means you have to share your profits with shareholders. In a private company, the owners can keep all the profits.
Public shares bring in money, but severely incentivize short term profits.
It’s expensive to be public. You have to make all sorts of public disclosures and, even if you do it all right, somebody can still sue you claiming that you misled investors.
Public companies can make a lot of money if they are perceived to be likely to grow. But the inverse is that if you aren’t growing, then money is flowing OUT. The money loss can be so severe that public companies often can’t afford to EVER lose money, not even in the short term – they struggle to put money into something that will take years to pay off because it shows them losing money, so people sell stock, which loses even more money, so people sell more stock, and so on.
Public companies are also have to publicly put info out about their business – how much they made, how much their executives make, what their plans are for the short and long-term.
Private companies don’t have to tell the public anything. They can work on something quietly to surprise their industry with a disruptive offering, which can be a competitive advantage. Their compensation packages are private, so it’s more difficult to woo away executives with competing packages without knowing what they’re currently getting
A public company cannot just choose to go private. A sufficiently large group of its owners may choose to take the company private (which involves buying out the shares from anyone who doesn’t stay in that ownership group).
The reason they would do that is largely the same reason anything might be taken from public to private – they want more personal and direct control over it.
A private company can make drastic changes to the business models without being pummeled by Wall Street. Sometimes, companies want to evolve to a different payment model like SaaS, but that drastically affects the numbers that are reported to Wall Street. This triggers unwarranted selling and can be very disruptive to business. Going private makes it a non-issue to do things like this.
No longer have to keep shooting to meet Wall St. quarterly estimates so companies can plan longer term strategically vs. focusing on next 3 months so much. Can focus on product, customers, employees instead of just shareholder value.
Avoid a massive pile of compliance/audit requirements.