Public Nuisance: It Pays To Be Private

from the why-bother-going-public? dept

Apparently, if you look at the valuations on many private companies, put next to comparable public companies, you’ll find that the private companies have higher valuations. This could just be wishful thinking – since private company valuations aren’t subject to the same market pressures of a public company, but there are some other reasons as well. A private company is under less pressure and has more room to make some long term strategic moves. They also don’t have to worry about “quarterly numbers” meeting expectations. Finally, they don’t have to pay all the various fees required of public companies – and spend all that time and money dealing with analysts. In general, though, it’s really a perception thing at this point. Any public company is getting dinged simply for being public – as so many investors simply want out of the market. At the same time, private companies that are seen as “rising stars” get a boost from VCs with extra cash trying to find a place to put their money.

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