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A company may choose to go private to have more control over its operations, avoid public scrutiny, and focus on long-term growth without the pressure of meeting quarterly earnings expectations.

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What happens if a company decides to go private?

When a company decides to go private, it means that the company's shares are no longer traded on a public stock exchange. This allows the company's owners to have more control over the business without having to answer to public shareholders.


Can a Private Company be Publicly Traded?

In theory any company can go public, provided that they can raise the money.


What happens if a public company decides to go private?

When a public company decides to go private, it means that the company's shares are no longer traded on a public stock exchange. This typically involves a process where the company's existing shareholders, often including management or outside investors, buy back all outstanding shares to regain full control of the company. Going private can provide more flexibility and privacy for the company, but it also means less transparency and access to capital compared to being a public company.


Can someone invest in a private company and make money?

Contribution to the share capital of a private company is permissible only if all the existing shareholders approve of such infusion/ investment of capital. Further, the shares of the private companies are not traded in the official exchange. Hence only way to make money by investing in a private company is only through investment in the capital of the company with the permission of all the shareholders and enjoy the dividends of the profit, if any. However such permitted investment sometime may appreciate if the private company decides to go public and the shares gain in value.


What is the difference between public and private stock?

Private stock is issued by a private company. It is hard to get into a private company so unless you know someone, you probably won't have the opportunity to invest. Information about the company and access to the stock is not subject to the rules of the SEC so the company is not obligated to share financial information. There is no PE on private stock because the market has no influence over pricing. You may also have trouble trying to sell your shares. Private companies control the number of shares, who can buy them, when and if you can sell them and at what price. The company will be the one to buy back your shares and redistribute so you have little control, if any. In my experience, you have to know about the plans for the private company and trust the owners and hope they meet their goals - increasing the value of your shares. Sometimes companies are private because in order to become public they need to have a certain amount of money in the bank and are striving for enough capital to get there. For others the goal is to build enough value in the business to sell it for a substancial gain at which point you would benefit incrimentally. For most investors, this is not a good way to go. Public stock means a company has basically sold a portion of itself to the public by offering shares in the business. In becoming "public", these companies are obligated to the rules of the SEC and have to report all financial information on a regular basis. You have the opportunity to study the company, market conditions, PE etc in hopes that if you invest, your share price will go the right direction. You can also buy and sell at market value through a broker. Either way - it's gambling.

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