Companies Don't Have To Go Public

from the well,-of-course... dept

At the end of last week there was a flurry of articles from people talking about the rumors that Google would announce an IPO this week. We didn’t post this because it’s the exact same story that people have been running for months about how Google is probably going to need to disclose their financial info by Thursday. That was nothing new at all, but many people misinterpreted it to mean that Google would go public this week. At most, they might file to go public – which is quite different from actually going public. Even if they release the financial information as expected, it doesn’t mean they have to go public, and some suspect that they’ll stay private a while longer. While it’s true that they’d be revealing the same info, there still wouldn’t be the same pressure, because no one would be buying and selling their stock. Google seems to like being a private company, and while there’s a lot of pressure to go public, that doesn’t mean it will happen. One small note in the article was pretty interesting, though. It turns out that Google was actually structured as two separate companies (Google Inc. and Google Technologies) to keep them under the 500 shareholders financial reporting rule for as long as possible. Still, this whole debate brings up another annoying misconception that companies need to go public. While it is common, it is by no means necessary – and there are some very successful large companies that have stayed private and are quite happy in that position. Just like startups don’t need to raise venture capital, established companies don’t need to go public – and many execs who understand the downsides of being public are avoiding pressures to go the IPO route. Going public does give the company (and its shareholders) some liquidity, but that comes at a pretty steep price.

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Companies Don't Have To Go Public”

Subscribe: RSS Leave a comment
Ed Halley says:

No Subject Given

The financial guys on the radio were commenting that the IPO could be a huge run-up on the opening day. What they didn’t mention was how bad for a company this can be.

A huge 500% increase on opening day has two major downsides: (1) it sets the market up for “flipping” or an immediate selling-spree, and (2) it becomes clear that the company should have valued the initial prices higher, so serious investors start looking even harder at their possibly weak financial analysis. There’s no reason to invest in such a company once the sell-off begins, so the sell-off is very long and persistent.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...