The process of moving from government controlled system to a
privately run for profit system.
It also involves repurchasing of all a company’s outstanding
stock by employees or private investor.
As a result of this initiative, the company stops being publicly traded.
Sometimes the company might have to take on significant debt
to finance the change in ownership structure.
Why companies would like to go private?
-To structure the company as it is perceived that the process might affect the stock
prices in the short run
-To avoid the expense and regulations associated with
remaining listed on a stock exchange
-To make the business go into private hands as opposed of being
public
Advantages of Privatization
Perceived and anticipated increase of productivity of the
company
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