The hidden costs of being public—and why private ownership is often the better bet
If you ask most CEOs who have worked in both settings, they’ll tell you: managing a private company is much more attractive than running a public one. I’ve experienced both, and there’s no comparison.
And the data supports this. In 1977, there were about 7,000 public companies in the U.S. By 2024, that number had decreased to just 4,700. Meanwhile, private equity investment has surged—from $600 million in the late 1970s to nearly $10 trillion today. Companies that might have once felt compelled to go public now have another option: they can access the massive pool of private capital or even sell to a private equity firm and exit the stock market entirely.
So why is private ownership emerging as the favored choice? Let’s explore some of the reasons.
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The High Cost of Being Public
Many leaders are surprised by the high cost of complying with regulations when running a public company. The Sarbanes-Oxley laws—created in response to corporate scandals—aim to ensure proper corporate governance. However, compliance is costly. Small public companies may spend $3–4 million annually, while large firms often spend ten times that amount. The penalties for failing to meet requirements are severe, leaving no room for shortcuts.
That’s money and management bandwidth that could otherwise be allocated to innovation, customer service, or growth. In a private company, those resources can be used more effectively.
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Risk Tolerance and the Quarterly Grind
Public markets tend to emphasize short-term results heavily. Missing a quarterly earnings forecast can cause your stock to fall sharply—even if your long-term strategy remains solid. This environment makes public companies cautious, often leading them to avoid risks that could promote future growth.
Private companies, by contrast, can take more risks. They can pursue projects that might not succeed for years, without stressing over the next quarterly report or analyst opinions. It’s no surprise that many struggling public firms go private, recover, and only then consider rejoining the public markets.
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Consolidation and Scale
Another trend fueling this shift is consolidation. Large firms keep acquiring smaller companies, which decreases the total number of public companies. Meanwhile, private equity firms have grown so much that they can now purchase billion-dollar enterprises outright. In past decades, the only way for a business of that size to raise capital was to go public. Today, there is enough private capital available to make that unnecessary.
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The Distractions of Public Life
Being public isn’t just about compliance and reporting. It’s also about shaping perceptions. Public company CEOs spend a lot of time pitching institutional investors, attending roadshows in New York or London, and securing analyst coverage. Smaller public companies, in particular, often struggle to attract sufficient buy-side demand to keep their stock prices stable.
And then there’s the risk from short sellers. I’ve seen cases where a company’s short interest exceeded its total market value. Dealing with that takes a lot of leadership time—time that could be better spent serving customers and employees.
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Brand Considerations
Of course, some companies benefit from being public. Iconic consumer brands like Coca-Cola, which seek broad ownership and liquidity, are naturally suited for public markets. They even manage their share prices to keep them accessible, splitting the stock if it rises too high.
On the other hand, companies like Berkshire Hathaway take a different approach. Their Class A shares trade for over $700,000 each, suggesting they aren’t aiming to make ownership easy to access. For them, being public serves a different purpose than it does for a consumer brand.
The Sunny Side of the Street
Ultimately, the choice to remain public or go private depends on strategy, brand, and access to capital. However, the trend is clear: more companies are realizing that the burdens of public ownership outweigh the advantages.
For leaders, the appeal of private ownership is clear. It reduces time spent on compliance and investor relations, giving more freedom to take risks and invest for the long term. It also reduces distractions from the constant pressure of quarterly earnings.
Having experienced both sides, I can say—private is truly the bright side of the street.
