Doesn’t the inability to trade the shares on a stock exchange alone diminish their value?
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Being publicly traded has its pros and cons. The pro, and it’s absolutely THE most important pro, is that you raise a TON of money during that IPO round at the very beginning. That’s the whole point, after all. You need a bunch of money to expand your growing company, and so you basically sell the ownership of the company to the public in exchange for a lot of money. That’s great, but…
Now the previous owner of the private company is not in control of the company any longer. The shareholders are in control of the company, and they will be the ones hiring/firing the CEO and executive team. If they don’t like the old original owner, then he’s not going to be the CEO and they will go find someone else. EVERYTHING is now beholden to the shareholders. It’s their company, and they want money. Namely, they want their stock to rise in value so they make money. If the current CEO can’t do that, then they will find someone else who will.
So, what are the benefits of buying back all that stock and taking the company private again? Well, it means that an individual owns the company again and is 100% the person in charge. Whatever their vision is, is what the goal is. You don’t need to answer to anyone, and you don’t need to make the shareholders value the #1 priority. Also, you don’t need to admit anything (like your financials) to any shareholders so you can keep all that stuff secret and run the company however you see fit. You’re the one in charge, end of story.
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