Public Companies vs. Private Equity Backed Companies

Every individual on this planet is running a race of earning huge amounts of money in order to sustain themselves. Every day new methods and plans are coming up for making investments. Investments are the best way to make savings for the future and who would not want to enjoy a hassle free life during the dusk years of his life.

Among the numerous type of schemes available private equity is one, which enables one to buy another company as well as raise money for further investment. This owning of companies can be done by the government, an individual, a family or another company as well. They can be listed in the stock exchange or they can also be equity firms. The investments in equity funds are for small to medium enterprises.

Robert Stefanowski, the Chairman and Managing Partner of the company 3i North America and 3i Asia, can well account for the growing demands of private equity as that is the primary product of his company 3i. The 3i group is an international investment manager focused on mid-market private equity, infrastructure investment and debt management. Robert has been working here since 2008 and is in responsibility of the company’s investment strategy across North America and Asia.

The stock exchange is a public company while as mentioned above the 3i group is privately held company. Now what is the difference between investment in the two?

  1. The first point of difference, and a very obvious one, is that a public company will have many more share holders as compared to a private one. It could be said that the public companies have a huge number of small shareholders while a private company has a small number of huge shareholders.
  2. Since the number of shareholders is more in a public company the company does not authorize anything to the shareholders while the private company gives a lot of responsibilities to its shareholders.
  3. The public company could have numerous different agendas as opposed to the single common agenda of the private company.
  4. The number of stake holders is a hindrance to the decision making process of a public company as it takes time to gather support from so many different people; on the contrary taking decision on any agenda is a rather quick and convenient thing for a private equity based company.
  5. Again the changes in the management cannot be brought about easily in the public company owing to its large number of shareholders; while the same is easily carried out in its private counterpart.
  6. The number of rules and regulations of a private equity backed company is much less in comparison to the other.
  7. The final point of difference is that the compensations offered to the managers at a public are not s lucrative as that of the private ones, which is why often the mangers of the public company move to the private companies for better compensation.

Whether it is a public company or private equity backed company, the experts of private equity and investment management like Robert Stefanowski will always recommend an investment in private equity for a better future.

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