Before looking Public or Private it is important to make sure that you are completely clear about the differences between Private limited company and Public limited company. Here you can know about them from Private Limited Company and Public Limited Company.
Different factors come into play when a firm has to decide whether to be a Private limited company or Public limited company. In recent years a number of firms have reverted to Private ownership after being publicly listed, the most well-known example perhaps being Virgin which was bought back by Sir Richard Branson after it was floated. He was unhappy with the way the market was valuing the shares.
It tells us one of the main reason in becoming a publicly quoted company, and that is that the company is left to the vagaries of the stock market to value it & this may be driven by factors other than those very important to the company.
And other issues that may be related for Public companies are when the shares are floated on the Stock Exchange and a loss of Control that the original owners may face.
The divorce between Control And Ownership, the corporation is owned by the shareholders who have bought through the market, but is run by the Board of Directors. Though the shareholders may have ultimate say on the composition of the Board, this is hard to enforce in practice and it may lead to this divorce between Ownership And Control with the owners and managers potentially having different objectives.
The company may become an easier target for takeover as the shares are publicly traded.
The initial Size Of The Business, generally small Businesses that can relatively simply be set up as Private companies may not have the capital required to become a Public company, the minimum share capital necessary is £50,000 and the lawful requirements can be costly in terms of legal fees, etc.
Size Of The Business - Control And Ownership
PRIVATE LIMITED COMPANY ADVANTAGES
IMPORTANT ELEMENTS OF EMPLOYMENT
