Zen and the Public Company

Here is fund manager Dan Loeb on the paradox of being public.

Why can buyout firms take public companies private and make enormous returns, while the same type of returns seem out of reach for public companies and their shareholders? He went on to posit that private-equity firms were essentially arbitraging the public markets and “are appropriating profits that should belong to public shareholders.”

While it’s a somewhat unusual view, I don’t entirely disagree. Mind you, I also think that the idea that public companies should be able to make the kinds of ligitation-free structural changes that private companies can begs the question, “Why do things ever have to get so bad that you must make such radical changes in your organization?”

Related posts:

  1. VCs on Boards of Public Companies
  2. Collusion in Private Equity
  3. The Death of Venture-Backed IPOs
  4. Business 2.0: ‘Tis the Season to Go Public
  5. IPO Market is Squishy

Comments

  1. Simon says:

    I think this is partly driven by knee-jerk regulations versus regulations that are actually effective.

  2. Michael Robinson says:

    Paul: “Why do things ever have to get so bad that you must make such radical changes in your organization?”
    What radical changes? You mean like eradicating the entire board of directors?
    If so, I think the question kind of answers itself, don’t you?

  3. Brent Buckner says:

    Shouldn’t your previous entry’s topic (“The $100-Billion Buyout Fund”) take care of this? Deep sources of funds and competition for deals should drive up the price of buyout deals, so the public shareholders sell out at a price that shows only a suitable risk-adjusted discount for the work that remains for the bidder to accomplish.