[Vishal Patel]

What type of acquisition is easier between a publicly traded or privately owned organization and why?

[Jianxiong Zhang]

A privately owned organisation acquisition is easier.

This is due to:
1.) Less interference from board members/shareholders
2.) Straight forward transaction
3.) Tend to deal directly with business owners and lessen chain of communication

[Manish]

This will be dependent on a number of factors such as if the stock is widely held, are there majority shareholders, is the company in distress and what regulatory approvals are required? A privately held company with a single shareholder might be more challenging if the price they demand is not reflective of fair value, compared to a public company that may or may not be widely held but where the board has a fiduciary duty to evaluate an offer.

[Lisa Hall]

Other factors to consider include the goals and complexity of the integration after the acquisition is approved.

[Lana Ilchenko]

I think there are complexities in each type of company. For example, in some countries private companies don’t have to make their accounts publicly available, making an initial approach that much harder and due diligence potentially longer. One may end up doing quite a bit of expensive work with an offer being rejected due to inflated expectations by the current owner. The cultural integration may also be more complex, especially if acquired by a public company.
On the other hand, acquiring a public company will be ‘very public’, so to speak, with more regulatory and market scrutiny, which can damage both companies if doesn’t materialize or succeed.

[jay]

Private companies have less red tape to navigate. They still have to navigate the same complexities when doing due diligence for strategic, cultural, and financial alignment.

[Mark Hassell]

I tend to agree with Lana’s response above. Each case presents it’s own set of complexities. For example, with private companies, I have seen relatively simple transactions fall apart due to a blocking shareholder.

[Della]

Legislative and/or regulatory factors also contribute to the ease of acquisitions, for example, where entities are regulated by a Central Bank and certain statutory approvals are required by the acquirer.

[Aleksandar]

I think acquiring a privately owned company is generally easier:
1)Direct Negotiations: Dealing with business owners directly often reduces the layers of communication and decision-making, leading to faster agreement on terms.
2) Fewer Regulatory Hurdles: Privately owned companies typically face fewer disclosure and reporting obligations compared to public companies, streamlining the transaction process.
3) Limited Stakeholder Interference: Without the need for approval from a large board or numerous shareholders, the decision-making process is more straightforward.

[Seraphina Ho]

Acquiring privately held companies would likely be simpler and faster. Publicly held companies would still need to go through delisting, which adds on extra regulatory steps

[Chris]

Hey, awesome question! Public companies give you a lot more transparency because of regulatory requirements like SEC filings, which can really streamline due diligence—though it also means dealing with more stakeholders and the possibility of competitive bidding wars throwing a wrench into things. On the flip side, private companies tend to keep things simpler with fewer decision-makers involved, making negotiations potentially quicker, but the catch is you’ve got less public data to work with, so you might need to dig deeper or lean on creative approaches like industry benchmarks for due diligence. It all boils down to what you prioritize: readily available info with some added complexity, or a leaner process that might demand a bit more legwork. What’s your experience been like—has one approach stood out as smoother for you in a deal you’ve worked on?

[Edward Ruvins]

While private companies re much easier to manage, the public companies are much more transparent for the purposes of successful due diligence. Additional complexities are always added by the government scrutiny that add many additional layers to any acquisitions frequently making private acquisitions more complex.

[Author]

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