Go public or private?

Many companies are seeking for IPO opportunities while Tesla's founder, Elon Musk, wants to take Tesla private. The owners of companies can get a lot richer if their companies become publicly listed. Lei Jun, the founder of Xiaomi, became the 87th richest in the world after Xiaomi's IPO. There have been questions surrounding if a company should go public or private. When a company is private, its ownership and management are generally concentrated, it is easier to manage the company. While if a company is publicly listed, it has to publish its earnings every quarter, and any major event has to be made public and even require its board to have a vote, which can take quite long, so the efficiency of management is relatively poor than the efficiency of management if the company is private. In addition, because a public company's performance is evaluated every quarter, this forces the company to take actions to generate short term performance boosts. Of course, the investment made for long term purposes could be understood by shareholders; however, many of the shareholders only want to squeeze companies' profits as well as cash flows out of the companies to put inside their own wallets as soon as possible; therefore, in general, it is not easy for public companies concentrate at generating long term growth.

Being publicly listed means financing is a lot easier. Once a company is publicly listed, it is easier for the company to borrow from banks while the company can finance itself from the equity market. If a company can have an easy access to funding, it is easier for a company to operate smoothly in order to generate sustainable profits and growth. Of course, a successful private company can also get sufficient funding to help itself to grow; however, when a private company and a public company are at similar levels, the public company definitely can get more funding than the private company.

There is not a clear judgment to say whether one is better than the other; however, for a starting company or a fast-growing company, being publicly listed might not be a good idea, though it can help the company to get an incredibly large amount of funding in a very short period, since such company should focus more on long term growth rather than short term earning boosts.