I’m writing a story about a company with a new leader focused on making stock prices rise. I want to get the company to do basically the opposite of making their company public. From what I’ve read, you don’t want to do buybacks as a company and going private might be equally as bad, but is it?
In: Economics
A private company is a company that is owned by a single individual or small (relatively speaking) group of people. It cannot sell shares on the open market to the public. A public company is one who has sold ownership (shares) to the public on the open market. A public company going private means an individual/group of people are buying up the shares of the company and will no longer be trading them on the open market.
Elon Musk took Twitter private – he bought up the public shares and now controls the company.
Liquidation is when a company is selling off as many of its assets as it can to generate cash (usually due to the company closing that section of business, bankruptcy, etc).
There’s a few things you need to think about with your story – every CEO has the goal of making the stock price rise. That being said, an individual/group that plans on taking a company private will also want the value of the company to rise.
Advantages of going private: Significantly less financial regulation, more control over management decisions, and being able to focus more on long-term company growth than short-term profits.
Disadvantages of going private: Harder to raise capital since you can’t sell shares to the public market, potentially more risk for your money (most people that take a company private essentially put all their eggs in one basket – aka the company – rather than diversify their portfolio), potentially (not always) more legal risk for the owner depending on the structure of the company (though someone rich enough to take a company private will likely be rich enough to have a good team of lawyers structure the company in such a way that limits their liability)
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