Wednesday, July 23, 2008

Private = Stable

I read an interesting article that talked about SAS, a privately held software company.

The points made are:

A private firm can be more stable because it is not at the mercy of the market. The sacrifice is the influx of capital from an IPO, but what is gained is consistency.

Public companies can be acquired by hostile takeover, and their mission statement becomes "increasing shareholder value". By keeping the reins, the owner(s) have more control over their future.

It ends with a quote from the founder/CEO, Jim Goodnight, saying, "The capital market guys are the ones that made all these really bad investments. I'm not sure anybody should ever listen to Wall Street again. They don't know what they're doing."

There are advantages to remaining a private firm.

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