The Difference between Private & PE Backed Companies
Well, in order to understand the difference between a publicly traded company and one that is backed up by private equity, there is need to list a few important facts. Make sure to read carefully in order to understand the most important factors that drive a public company versus on that is backed by private equity: - A private equity backed company typically has a lower number of shareholders than a public company
- When it comes to a public company, the greatest majority of shareholders are not allowed to intervene with the management/operational side of the business. On the contrary, private equity investors are allowed to get involved from an operational point of view, and they can be on the board of the company
- As a rule of thumb, a public company is mostly focused on short term earnings. Also, a public company always has to get approval from shareholders when bigger transactions are involved. PE Backed companies can always take very quick and effective decision making, and they maintain the costs low. - At public companies changing the management is always an extremely difficult process for shareholders (and time consuming too!). Regarding PE backed companies it is very quick and easy to perform management changes. Check here https://www.linkedin.com/company/monument-capital-group-holdings-llc for more info.
- Another quite important fact regarding public companies is that they are constantly losing very good managers, since they are attracted to work at private companies. This means, one will rarely see a public company with an extremely talented manager spending decades on board at that company. As a contrast, Private Equity and Private Equity Backed companies can afford to offer very high incentives in order to attract the best managers on board. For more valuable information and insight into the world of Private Equity Investments, check out the main site of Monument Capital Group.