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Private Vs. Public

Private Vs. Public

by Rick Turoczy on September 1, 2006

For Luther, going private was a no-brainer. His fellow CEOs seem to agree. So far this year, about $200 billion has flowed into private equity buyouts of public firms in the U.S., according to Thomson Financial. That compares with $129 billion for all of 2005. For CEOs, going private allows an escape from the twin pressures of quarterly earnings and the Sarbanes-Oxley Act’s crushing compliance regulations.

But is private equity ownership that much less onerous than being publicly traded? For managers, the advantages of going private are no longer as clear as they once were. Critics of Sarbanes-Oxley claim that CEOs can’t wait to escape the law, but many private companies are actually complying with it in case they eventually go public again.

“It’s better to operate in a public way, so they don’t have to incur a lot of additional costs when they do go public,” says William Gedwed, CEO of HealthMarkets, formerly UICI, a specialty insurer that was bought by three private equity firms in April.

Private Vs. Public

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