Publicly traded or privately held - why does it matter?

Question

How might understanding whether a company is Publicly traded or privately held inform a case, from turnaround to profitability to M&A?

Answer 1

Hello!

I agree with you, by the book, you should be able to perfectly solve the case without access to that info.

Furthermore, M&As are super simple, structured cases that are indeed very repetitive.

In any case, if we knew it, it would give us some hints about capital availability, stakeholders, investors, etc. but only hints, nothing groundbreaking

Hope it helps!

Cheers,

Clara

Answer 2

Here are a few factors:

1) Access to capital. Typically higher for public companies. This impacts options for turnaround or achieving profitability.

2) Investor pressure. Typically higher for public companies. This impacts timelines for turnaround. Options for business strategy in politically or socially sensitive areas.

3) Knowledge of the company. Typically higher for public companies. This impacts the level of risk for M&A seeking to acquire the company.

Hope this helps!

Allen

Answer 3

Hi there, I agree, you don't have to know these factors to be able to solve the case. It can only give you some hints or extra ideas, which might be useful to prove your reasoning and problem-solving skills, but it's not crucial.
Best,

GB

Answer 4

Hi there,

While it's not necessary, the #1 benefit that pops into my head is how much information you'll be able to get about the company.

I have a few cases where the candidate is prompted to brainstorm "where we can find information". This, of course, can be market-based (government websites, think tanks, etc.). However, if we need to figure out the value of the company, a publically traded one will have (10-Ks, quarterly reports, etc.)