Friday, June 25, 2021

Differences BTW Public & Private Companies



Toronto resident Matthew “Matt” Cameron is an experienced lawyer who has served as senior vice president and general counsel of Akumin, a publicly traded US outpatient diagnostic imaging service provider, since 2018. Responsible for the company’s acquisition, finance, and legal/risk portfolios, Matthew Cameron also completed Akumin’s initial public offering (IPO) on the Toronto Stock Exchange (stock symbol AKU) and its cross-listing on the NASDAQ (AKU).

Public companies like Akumin differ from private ones in several ways, including the following three:

Ownership
The first and most obvious difference between the two types of companies is their ownership. As reflected in the name, private companies are privately owned, most often by their founders, management, or a group of private investors. In contrast, public companies are entirely or partially owned by the public after it has acquired their shares in an IPO or later on an exchange. As a result, the shareholders have a claim on a portion of a public company’s assets and profits.

Raising Funds
The next main difference between public and private companies is in the ways they raise money. It results from the fact that public companies have access to the financial markets and can raise funds by selling their stock. Private companies, however, rely predominantly on profit reinvestment, loans, or investors to finance their expansion or other projects.

Regulation and Transparency
Finally, since public companies have access to and can offer shares in the capital markets, they are subject to rigorous government regulations and mandatory administrative and financial reporting. For example, US public companies must file quarterly and annual earnings reports with the U.S. Securities and Exchange Commission (SEC). This information is disclosed to the company’s shareholders and the public. As they do not have stock listed on a stock exchange, private companies do not need to share their financial information with anyone.


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Differences BTW Public & Private Companies

Toronto resident Matthew “Matt” Cameron is an experienced lawyer who has served as senior vice president and general counsel of Akumin, a p...