Lesson 6 of 6 · 14 min
Going public, going private and who owns corporations
Private companies go public through an IPO, a direct listing or an acquisition (including by a SPAC); public companies go private when investors buy out all the shares, often with debt; and corporations may be owned by individuals, institutions, other companies, governments and non-profits.
In short
- IPO: the company meets listing rules, an investment bank underwrites the sale of new shares, and the proceeds go to the company.
- Direct listing: no underwriter, no new shares, no capital raised; existing shares are listed and existing holders sell. Faster and cheaper, but mostly for large, well-known firms.
- Acquisition: bought by an already-public company, or by a SPAC, a listed 'blank check' shell that raised cash in its own IPO, holds it in trust and must buy a private company within a set time or return the money. SPACs have replaced the old reverse merger.
- Take-private: investors buy all public shares at a premium, often financed with debt (a leveraged buyout), and delist, aiming to raise value through changes made out of public view.
- Listings are growing in emerging markets but shrinking in developed ones (more M&A, more private capital, owners preferring control).
- Owners include governments (state-owned corporations, often partly privatised via IPO) and non-profits such as foundations, which may be controlling shareholders.
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